Real Estate Investor Magazine September 2013

CONTENTS September 2013 COVER STORIES 8 Master Investor 12 The Green Evolution 24 Buy-To-Let green Products 44 Sustainable Buildings 62 Crowd Funding 36 Building Your Green Home UPFRONT RESIDENTIAL COMMERCIAL 5 Investor Talk 22 Get Your Green On 40 Gas-Powered Generation It’s green month! And think outside the box The future of energy is here 6 INBOX 24 Does High Risk = High Returns 43 Fast Facts Ask The Property Experts Or is low risk better? The benefts behind your green building Buying property 26 Avoid Gearing Gafes 44 Sustainable Buildings 8 Master Investor Don’t gear beyond your afordabilty Investing in the future Spearheading a property revolution 28 Breaking With Assumptions 48 Environmental Indemnifcation 12 The Green Evolution Greening social housing in South Africa Look a little closer at the laws Don’t get left behind! 30 How To Build Your Green Home 52 Reading Listed Results 18 News Alerts Without paying an arm and a leg Become fuent in fnance jargon The Good, Bad & Ugly 34 Going Green In The Kitchen 54 Invest In Power Energy-efciency ofers huge savings New energy solutions in business INTERACT WITH US fnd us on facebook fnd us on twitter fnd us on youtube www.facebook.com/Real Estate Investor Magazine www.twitter.com/Sa_Reimag www.youtube.com/reimag www.reimag.co.za September 2013 SA Real Estate Investor 1

OFFSHORE CONTRIBUTORS 60 Green London PROFESSOR FRANCOIS VIRULY Invest in the future of eco-housing Francois is a property economist with over twenty years’ experience in the analysis of the South African property market. Professor Viruly lectures in Urban 62 Crowd Funding Economics, Property Development and Portfolio Management at UCT. The property revolution has started LEW GEFFEN Lew is undoubtedly one of the doyens in the business. He is considered as one of EXTRA FEATURES South Africa’s leading experts in real estate. As chairman of Lew Gefen Sotheby’s International Realty, Lew also holds directorships in other property companies. 56 Property Professor MIKE SMUTS Social and economic returns “Author, entrepreneur and full time property investor, Mike Smuts is a recognised London property expert who has helped many South Africans make great returns 66 Lessons in the London property market. Creating your wealth PATRICK FORBES Patrick studied at Rhodes University completing a BSc in 2002 and a LLB in 2004. He is currently completing his LLM in Environmental Law through the University Kwazulu-Natal Durban. Patrick joined Garlicke & Bousfeld to serve his articles. SCOTT PICKEN Scott is the CEO of IPS Invest & Wealth Migrate, he is an ofshore investment specialist. Starting in 2003, IPS has been helping people invest internationally Publisher - Neale Petersen with confdence for many years. Editor - Angelique Redmond Designers - James Clark & Amy Little JONATHAN SMITH Trafc - Juanita Heilbron Jonathan is the director of Courtwell Consulting and has extensive experience in Financial Manager - Marisa George property and consulting including educational programs. Courtwell Consulting Ofce Assistant - Melissa Petersen provides fve key services to the private and public sectors in South Africa. Web Administrator - Russell Bennett Sales Manager - Roy Lategan Sales Executives - Andre Evans, Renier Lombard, Alex KEN GAFNER Masamuna & Marc Oppel Ken is an electrical engineer with experience in farm biogas, cogeneration and gas fred power station projects. International experience includes 6 years in the UK and Germany. He is the Managing Director of Single Destination Engineering. Tel: 021 674 5026 Fax: 086 627 2400 Email: [email protected] MONIQUE TERRAZAS Physical: Bizmall, Shop 3, Heritage House, 20 Dreyer Monique is a journalist and freelance writer, with more than a decade of Street, Claremont, 7700 experience across a range of industries, and was the winner of the 2012 SAPOA Postal: PO Box 858, Howard Place, 7405 Property Feature Journalist of the Year Award. Advertising: 021 674 5026 Subscriptions: 0861 228 669 / [email protected] KOOS DU TOIT Distribution: On The Dot Distribution Is the CEO of P3 Investment group, he is an invaluable source of education and For distribution inquiries contact Craig Hughes information on investing in property. P3 ofers hope and guidance to anyone on 021 918 8659 / 073 395 2396 looking to build a succesful investment portfolio. Printing: CREDA Communications JOHN ROBERTS Published by Is the CEO of The Just Property Group, he is one of the property industry leaders. REALE MEDIA The Just Property Group’s vision is to provide focussed property services through Neale Petersen (CEO) specialised franchise outlets, in specifc niche areas in the property arena. B. Taylor IAN ANDERSON Ian Anderson (B Com, CFA, CAIA) is Chief Investment Ofcer at Grindrod Asset Management. He has more than 17 years’ experience and a proven track-record in Printed by Distributed by managing the portfolios of listed property securities. Also Published by REALE MEDIA Just JUST PROPERTY MAGAZINE PROPERTY All rights reserved. No portion of this © publication may be reproduced or used Mega Trends In Commercial Property Shaping the future of investors in any form without prior written consent Spot Checks GET THE RIGHT FINANCE What to look out for Jason Lee tells you how Heavenly Tenants and permission from Reale Media. The ENSURE YOUR RETURNS How to fnd them In a volatile economy Rent killing you! COME OUT ON TOP How to save publisher gives no written guarantees or With Africa investments FREE www.justpropertygroup.co.za assurances and makes no representation OFFSHORE HANDBOOK regarding any goods or services written or advertised within this edition. Prospective August 2013 R50.00 (Incl. VAT) WINNER R43.86 Other Countries SAPOA AWARDS ISSUE Best Printed Property investors should always consult their Publication 2013 Autumn 2013 4 www.reimag.co.za Copyright © Reale Media Z www.reimag.co.za MASTER INVESTOR JT FOXX attorneys, advisors or accountants 2 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

www.reimag.co.za

INVESTOR TALK BY ANGELIQUE REDMOND It’s Green Month! Climate change is a reality and one that every single person needs to be aware of and, more importantly, do something about. Tis month we are looking at ways that you can save money while saving the environment. Whether you green your entire house or just start with recycling, there is a part each and every one of us can play, from homeowners to property developers, in building a sustainable future for all. We have come up with every conceivable way you can make an impact, starting right now. TWITTER COMMENT Don’t forget that the week of 16 -21 September is ‘ Clean up and Recycle Week’. If you’re not sure where to take your recyclables, log onto www. Laura_Phillips@SA_Reimag mywaste.co.za and find the facility nearest to I Love your improving section. It has given me some great ideas you. We here at REIM are doing our bit and your magazine has been printed on Hi-Q Titan plus Follow us on Twitter paper, manufactured in accordance with the most SA_Reimag stringent environmental protection and sustainable forest development standards. Another thing we are celebrating this month is our 6th birthday! Over the past six years we FACEBOOK COMMENT have grown from strength to strength and we couldn’t have done that without you, our loyal readers, so thank you for the last six years and here’s to many more flled with the latest news and cutting-edge articles in the property investment and wealth creation world. Sifso Pule commented on Real Estate Investor Magazine Sifso wrote: \" Inspirational! Thank you very much If you want to share your investment story or journey, why not go to our facebook page and leave for all you do REIM team!” a message? And if you haven’t already, be sure to go to our website and register for the digital magazine, so no matter where you are in the world you can access and read the magazine. And, Like us on Facebook of course, nothing is more green than going digital. http://www.facebook.com/RealEstateInvestorMagazine Happy Reading! Angelique Redmond EDITOR PUBLISHERS FOREWORD We all know that the South African and global economy are always changing at a rapid rate. September is the start of a new season: Spring, a great time to get yourself focused to take action for the last part of the year. I have attended more than 10 property and wealth events over the last two months to improve my own education and personal economy, from IPD, NAC and Buy Below Market Value to our own Wealth Master Class with Donald Trump Jnr. This is our annual Green Issue and we also look forward to the forthcoming inspirational Green Building Council event in October. Robert Kiyosaki says the type of education needed to make people wealthy is very diferent from the formal education they got to make them become middle class. Real estate experts are all predicting upticks in business and investors say this is the time to rebound in property. One caveat is that investors will only prosper and achieve fnancial success if they are prepared to work on their own personal development and get out of their comfort zones. Get dedicated to your education and fnancial freedom is within your sights. Neale Petesen PUBLISHER “What is the use of a house if you don’t have a decent planet to put it on?” Henry David Thoreau www.reimag.co.za September 2013 SA Real Estate Investor 5

ASK THE EXPERTS Buying Property Lending Criteria Managing Tenants JT Foxx Ken Reynolds Michelle Dickens JT Foxx Organization Nedbank Corporate Property Finance TPN www.jtfoxx.com www.nedbank.co.za www.tpn.co.za Q Jonathan Stewart Asks: Q Steven Mzimande Asks: Q Ryan Daniels Asks: I have read about buying properties below market I am having difculty getting fnance to purchase I am a landlord who owns more than 200 value and also buying property without using any of an office block with a residential component properties both located in fats, I refuse to use an your fnance in the US quite a lot.  In SA I have also in the Johannesburg CBD. What is the bank’s estate agent to manage my properties. Is there a heard a few people say that is possible to do the same. criteria in awarding fnance to a Pty Ltd that is cost-efective way to use tenant check validation My question is how does that work in practice? applying for the fnance? via a central tenant management system?” A JT Foxx Responds: A Ken Reynolds Responds: A Michelle Dickens Responds: Buying properties below market is essential, not Lending of money in general and specifcally Tenant screening is a fundamental part of only for short-term success in real estate but also in the property feld is about the certainty of property management. A landlord’s property long-term sustaibility as a real estate entrepreneur. future income and its ability to service the debt investment can be seriously impacted by a non- Too many investors approach real estate like required, together with the value of security paying tenant, or worse a squatting tenant. gambling, they buy hoping it will go up. The available to secure the debt. In this specific TPN Credit Bureau understands that the houses win most times and it’s usually not your case the future income is only secure for three ability to place quality tenants depends on house. Buying properties without money doesn’t years on the ofces, depending on the quality having a previous record of that tenant’s rental mean that there is no money involved, it just means of the tenant, and the residential income is behaviour. For this reason TPN contracts with it’s not your own money. My whole life people told subject to market conditions over the period. landlords who may simply have one property, me, it does not work here, this country is diferent The property valuation will reflect this as even a cottage which they rent out, all property or the laws are diferent here. Bottom line good reducing the value of the asset and it will prove managers including independent agents, deals don’t come to you, you have to make them difficult to entertain an aggressive level of franchises as well as listed property funds. TPN good deals. So the answer to your question is, lending on this property. Funding of property members can access the TPN credit bureau yes it works, and I plan on showing the entire is not an exact science but depends on a mixture database to search for their prospective tenant’s country how to do it, not by teaching but by lots of the certainty of future income, adequate rental history including how the tenant paid their of properties. capitalisation and the expertise of the borrower rent each month of the lease. TPN members also to run the asset. Te norm in the market for the feedback to the database on a monthly basis how Here is a little secret, I buy real estate, I never just funding of commercial properties is between their tenant is paying (on time, late, partially or put in one offer. If you put in one offer you are 60% and 75% of value, with the balance having not at all), this feedback is loaded on the tenant’s allowing the person to say yes or no, you want to to be equity funded. credit profle and the tenant is advised via SMS engage in dialogue. So I usually put in a low all cash how their payments are positively or negatively ofer and another that is more creative. You will be Investing in commercial property is a capital- afecting their credit profle. surprised at the multitudes of opportunities you hungry business in that any portion of the now have and the negations you can take part in. purchase price of a property not covered by debt At that point everything is negotiable. needs to be equity funded and the numbers are usually large. Do you have a property question you would like answered by our experts? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] 6 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

MASTER INVESTOR BY MONIQUE TERRAZAS Spearheading A Property Revolution... Into a sustainable future 8 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

UPFRONT rian Wilkinson, CEO of the Green Research had shown that the GBCSA was Building Council of South Africa high growth trajectory and Brian’s key role was B(GBCSA), is leading a revolution in the to identify the infrastructure and competencies South African property industry, as increasing required to get the GBCSA ft for this growth. numbers of property owners, developers and Since then, the organisation has grown into a tenants realise the massive benefits green signifcant player in the property industry, with building delivers to their success. more than 40 certifcations completed, including the frst 6-star rating in South Africa, and more Brian’s education and experience has prepared than 20 staf members. him particularly well for this role. He graduated with a BCom degree from the University of Te next goal Brian set for the GBCSA was Cape Town, before completing a Chartered to change the marketing strategy from a passive Management Accountant (CMA) qualifcation approach to more proactive approach of actively BRIAN WILKINSON and later his MBA, also through UCT. engaging stakeholders in the property industry, taking green building into the market place. Personal Statistics He then joined Old Mutual in 1984 as a The big picture Age: 54 Property Investment Analyst, later heading up Qualifcations/Experience: B.Com the department, before moving to Johannesburg Brian’s passion for green building is founded on (UCT), CMA (Chartered Management to become the National Property Investment solid understanding and experience of the role Accountant), MBA (UCT) Manager, working with Ian Watt, a legend in green building plays in the big picture of the Achievements: Securing the World the property industry. current global situation. He believes that the Green Building Congress for Cape green building movement is an intelligent and Town At the time, Old Mutual was increasing very practical response to the clear and present Marital status: Married, with two its investments in property and Brian gained threat posed by climate change. He notes daughters impressive experience in a variety of large-scale that green building is a particularly effective projects, including big inner city developments, response, frstly, because the built environment Close-up industrial park establishment countrywide and accounts about a third of global emissions and, Mentors: His father, who arrived in SA land bank investments. secondly, because the built environment allows from the UK after the war with nothing a significant impact to be made in very short and built success through sheer hard Returning to Cape Town, Brian headed up Old time periods, by changing the way buildings work and Martin Buss, who was the Mutual’s Corporate Real Estate department, are operated. Tese two factors, Brian believes, GM of the then Old Mutual Properties. this time taking on the role of a corporate tenant, makes the built environment the single biggest Books: Management books by business which added a new dimension to his property abatement opportunity in global and local eforts experts such as Steve Jobs and novels by management journey. This, as well as the to combat climate change. Tom Clancy and Clive Cussler. electricity outages which were prevalent at the The best fnancial advice you have time, piqued his interest in reducing operating The GBCSA therefore focuses its efforts on been given? Successful investment costs through sustainability practices and green two aspects. The first is creating awareness requires a long-term view: don’t expect building. of environmental sustainability in built overnight returns. Green building environment, through maintaining a prominent provides exciting returns over the long In 2006, Brian left Old Mutual and turned profle in the media, ofering formal education term. his attention to consulting for a wide range of programmes, hosting premier green building organisations. He was soon invited to join the events and working closely with the public sector. Ilima Trust, an initiative which aimed to make the skills and experience of the “silver heads” The second focus area for the GBCSA is “Brian’s passion for green building is founded on of industry available to government and small its role as a recognised certification body, businesses through a mentorship programme, offering organisations, who are committed to in conjunction with Msaziszani, a development sustainability, legitimate and globally recognised solid understanding and experience of the role green funding initiative by Old Mutual, which certification of their environmental efforts in provided funding to start-up organisations. developing and operating green buildings. The certification engine is the Green Star building plays in the big The green journey rating, which has been adapted, customised picture of the current Through what Brian describes as a series of and localised from the Australian GBC coincidences, he was asked to join the GBCSA rating tool and covers commercial buildings, global situation” two years ago, at a time when the organisation specifcally Ofces, Retail, Multiple Residential was still relatively small, with fve certifcations buildings, Apartment buildings and Public and and fve staf members. Educational buildings. www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 9

MASTER INVESTOR Exciting developments a frst for Africa and a signifcant opportunity for starting point is to download and apply the GBCSA’s free energy and water benchmarking Te last two years have also seen some exciting local players in the property industry to network tool, which will allow them to evaluate how new developments, including the launch of the with experts and thought-leaders from 92 green their buildings are performing relative to a Green Lease Toolkit, and very recently, two building councils from across the globe, making statistically relevant South African benchmark, new rating tools: one for Interiors, sponsored this the most distinctive sustainable building which has been normalised or adjusted for by Standard Bank, and another for Existing gathering ever hosted on our continent. variables such as occupancy, the number of Buildings, sponsored by Nedbank. The cost question occupants, the type of building and even the number of computers. Both the Green Lease Toolkit and the Interior One of the most often asked questions, which rating tool creates a new market segment in the will no doubt be answered at this global It provides a measure of the building’s current green building sector, bringing the tenants into gathering of green building experts, focuses on electricity usage and water consumption the green building playing feld. In line with new the cost implications of green building. fgures, which allows for a better understanding tenant demands for greener and more efcient of current performance relative to the space and the increasingly green approach taken Brian says that stakeholders looking for benchmark. If the building outperforms the by the design community that manage the fit empirical evidence of the cost benefts of green benchmark, it delivers a marketing tool that out process, these tools allow tenants to beneft building will fnd the economic case for green will be indispensible in negotiations with from sustainability eforts in ft out and during building in the GBCSA publication Rands and tenants. If the building underperforms the operation of the building. Sense of Green Buildings, available on the GBCSA benchmark, it provides intelligence that can website. inform investment decisions. Te existing building performance rating tool is another exciting new development for the He notes that many owners, managers and GBCSA, given the reality that existing buildings developers remain fixated on the so-called BRIAN’S ADVICE FOR PROPERTY comprise the bulk of total building stock. Tis “cost premium” of green building. However, INVESTORS tool takes sustainability in the built environment Brian believes that while all new technology – 1 Green buildings are the future into the main stream mass market. As a result, including green technology – encompasses what – the environment, particularly Brian believes that within three years, green is often termed an “early adopter premium”, the in terms of operating costs, has rated buildings in South Africa will number in reality is that the green building has matured never been more conducive to the thousands. beyond the experience curve, and the tangible green building practices. manifestation of this is that the process of Working with the World Green Building certifcation is becoming more efcient as the 2 Take note of the growing demand Council, the GBCSA has also developed a quality of submissions improve. As a result of the among corporate and residential socio–economic framework for inclusion in improved experience and expertise in the sector, tenants for green properties that its certification, based on the premise that as well as the maturation of the technology, the are more cost-efective to operate. holistic environmental sustainability demands existence of a “cost premium” in green building consideration of the social aspects. Tis socio- is debatable. 3 Avoid anecdotal evidence that economic rating tool exists alongside the green green building is technical and building rating tool and has been made available Nevertheless, many still argue that there is a expensive – get an informed to other Green Building Councils around the cost premium involved, often considered to be opinion from an experienced world. around 2% for a 4-star rating, 5% for a 5-star professional. rating and 7% for a 6-star rating building. Tese Future developments are very speculative fgures, given the fact that 4 Equip yourself high-level The GBCSA is also working with the each project is unique, and must be considered knowledge and information to International Finance Corporation (IFC), a in the context of the long-term cost benefits. understand the economic and division of the World Bank, on a project that Some of these are easy to quantify, for example, environmental implications of a may culminate in a green building operation rental premiums and lower operating costs, while green building journey. system for residential property. Brian believes others, such as future-proofng a building against that should this initiative come to fruition, it will becoming obsolete and the proven increases 5 Understand that any “cost take green buildings into the consumer space in productivity, are more difficult to quantify premium” should be considered by providing a “lite” green building system for in monetary terms. But the bottom line is that in the context of long-term cost residential property owners. long-term cost benefts more than justifes any benefts and the value of future- perceived cost premium on a green building. proofng your property portfolio. More exciting news is that the WorldGBC Get in on the action Congress will integrate with the premier 6th So how do property developers, owners and annual Green Building Convention, hosted by tenants take advantage of the benefts that green RESOURCES the GBCSA at the Cape Town International building can offer? Brian suggests the best Convention Centre from 16 – 18 October 2013 – Green Building Council South Africa 10 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

COVER STORY BY MONIQUE TERRAZAS The Green Evolution Everyone’s going green... don’t get left behind! oing green is no longer a fad for tree-hugging hippies or a fashion statement among companies with large media budgets. It is an absolute imperative for success and survival in a new economic Gand social milieu, which has irrevocably changed the way we live, work and play - not unlike the advent of electricity or the introduction of computers or the Internet. And if you’re not going green, you’re running a signifcant risk of being left behind: as an individual, as a family, as a company and as a nation. And in few industries is going green as important as it is in the property industry. 12 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

UPFRONT The right thing to do The recent World Green Building Trends Over the past decade, green building has There can be no doubt that going green is SmartMarket Report published by McGraw-Hill emerged as a growing trend among a vigorous the right thing to do. Our current rate of Construction and United Technologies found interest group to create high-performance, energy- consumption of the planet’s natural resources is that 28% of architects, engineers, contractors, efficient structures that improve tenant and/or nothing short of gluttony, and at this pace, our building owners and building consultants around owner-occupier comfort and well-being while generation will exhaust - in just one lifetime - the world report that they are focussing their work minimising environmental impacts, says Sean much of the resources that have been created on sustainable design and construction, by doing Liebenberg, new business executive at Excellerate over billions of years. Te wise Native Americans at least 60% of their projects green. And continued Facilities Management. “With support structures tried to warn us: “We do not inherit the Earth growth is expected, as 51% of firms report that in place by organisations such as the South African from our ancestors, we borrow it from our they expect to be at high levels of green activity Property Owners Association (SAPOA) and children.” What are we leaving for our children in just three years. Te most notable part of the the GBCSA, both public and private entities and their children and the generations who will results is that this trend is not localised to one are increasingly pursuing green buildings in the live on this planet 200 years from now? part of the world or to developed countries. From institutional, commercial and residential sectors. 2012 to 2015 the number of firms anticipating Landlord and tenant mindsets are changing And those who are not willing to do the right that more than 60% of their work will be green and progress in achieving greener standards is thing merely for moral and ethical reasons will more than triple in South Africa, more than becoming noticeable,” he says. will be forced by a growing number of eco- double in Germany, Norway and Brazil, and The driving factors conscious consumers and ever-tightening will grow between 33% and 68% in the US, the legislation to do so. UK, Singapore, the United Arab Emirates and “Green business is intelligent business,” comments Australia. Peter Townshend, co-founder of Know More, a Green consumerism (Client demand) workplace and environmental consultancy. “One South Africa in the lead particularly interesting stat from Te World Green A silent revolution known as ‘green consumerism’ is rapidly gaining momentum around the world. South Africa features strongly in the report, which Building Trends SmartMarket Report is that the The most recent Ogilvyearth Sustainability reveals that green building is rapidly taking hold in top trigger driving future green building activity in Survey reveals that a whopping 88.2% of the country, with its share of frms that are highly South Africa is ‘It’s the right thing to do’, followed consumers would boycott a company or brand if dedicated to green building growing at a faster rate closely by ‘Lower operating costs’. Despite the they believed it was acting irresponsibly in the than in any other part of the world. It certainly is tremendous benefits of embarking on a green world. A huge number of people (92.1%) want great news that South Africa is taking its place journey, it seems that South Africans see greening as to know about the actions of businesses and among the leaders in green building. Overall, 16% a moral issue – more so than in the rest of the world.” of South African frms report heavy levels of green Top Triggers Driving Future brands towards people and the environment - in 2012, an eightfold increase in just three years. Green Building Activity in and this will then infuence their buying habits. South Africa The majority of people (85.4%) feel that not And they expect levels to more than triple in the Source: McGraw-Hill Construction, 2013 next three years. In respect of new commercial enough attention is given to water conservation South Africa buildings, 60% if frms report that they have future Global Respondents and a massive 96% are concerned about whether green plans, while 58% of frms reported plans for a product is made from renewable resources. Te retrofitting existing buildings. Notably, South Right Thing to Do survey also revealed that nearly 60% of the survey Africa is one of the only countries with a high level 26% 44% sample say they can’t trust green claims made by The Green Evolution with over a third (36%) of frms reporting planned Lower Operating Costs 42% ‘green claims’ are just another money spinner. brands and businesses and nearly 70% think that of reported green activity in the residential space, green activity for low-rise residential projects. “Tis just demonstrates how important it is for 30% Teir fndings are corroborated by those of local transparent and honest about their operations property experts. June 2013 proved a bumper Environmental Regulations business to do the right thing; they have to be and how they do business,” says Melissa Baird, month for green building certifications in the 34% strategist for Ogilvyearth. “If they get it right, country, with a total of six new buildings receiving 23% a Green Star SA rating from the Green Building they can secure loyal consumers for years to Healthier Neighbourhoods come.” Council South Africa. “This upsurge further 26% substantiates that the green building movement Legal compliance is rapidly gaining ground in South Africa as 11% Even if this radical shift in market demand developers and progressive businesses increasingly Client Demand embrace sustainable building practices,” comments does not spur companies into green action, the 24% Brian Wilkinson, CEO of the Green Building ever-increasing number of green legislative 35% Council South Africa (GBCSA). “These new developments should provide some impetus. ratings take the total number of Green Star rated Higher ROI These include the voluntary adoption of buildings in South Africa to 36, and include some 21% integrated sustainability reporting among impressive and signifcant developments.” 7% JSE-listed companies, as required by the King www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 13

COVER STORY III Report on corporate governance; the Expected Business Benefts of Green tax, an increase of around 8%. It will also afect Carbon Tax legislation; the energy efciency Building in South Africa the cost of building materials, notably cement, measures recently introduced into the National Source: McGraw-Hill Construction, 2013 and the cost of every other conceivable product Building Regulations; the recently approved New Green Building Green Retroft and service. Integrated Industry Waste Tyre Management Decreased Operating 7% 12% Plan (IIWTMP), funded through a levy on Costs Over One Year Employee productivity tyres, and the release of the South African Decreased Operating 33% 37% While effectively dealing with green Costs Over Five Years government’s national Climate Change consumerism, regulatory compliance issues and Response Policy. Payback Time for Green 7 5 rising operating costs, going green also benefts Investments (Years) companies – whether tenants or owner-occupiers The SANS 10400 part XA standards which – in respect of higher employee productivity and form part of the National Building Regulations These projected reductions in operating reduced absenteeism. focus on how buildings are designed and built expenses are not overly optimistic and will by providing guiding principles for minimum certainly make a substantial difference in a International studies have shown that requirements for items such as hot water supply, country where operating costs are soaring. In green buildings can produce a 20% boost in energy usage, design assumption (ie the design 2009, electricity tariffs increased 22.10 cents productivity, while people in green buildings process followed) orientation or location/ per kilowatt hour (c/kWh) to 33.14 c/kWh - have fewer incidents of colds, flu and asthma positioning of the building, floors, external an increase of 49.95%. Price increases in 2011, as a result of better ventilation systems and walls, fenestration (the design and placement of 2012 and 2013 were 24.8%, 25.8% and 16% environmentally-preferable paint and furniture. windows in a building) and roof assemblies. A respectively, which means that prices were A 2004 study of professional women in France further advantage for achieving such compliance raised in four years by 173% above the price on identifed a 57.1% reduction in sickness absence, is a tax refund in terms of the National Energy a 16.7% reduction in doctor visits and a 34.8% “New green Act, 2008 Regulations on the Allowance for reduction in hospital stays among subjects with Energy Efficiency Savings (as published in natural ventilation in their workplace. buildings are Government Gazette number 34596). Sustainability expected to decrease “Te result is that builders, contractors and Perhaps more important than all these they plan and construct all new buildings to operating costs by benefits for forward-thinking companies is even architects must change the way in which sustainability – ensuring that a company can ensure that the new laws are met,” comments 33% over survive the next decade. Ori Saban of solar water heating company, fve years” AGS Solar. “Statistics identify the support of Going green is the only way to sustain a the new legislation, showing that the use of business into the future, not only in terms of solar power in both residential and commercial being able to continue operating in the face of buildings is now climbing swiftly, and has been 31 March 2009, and 147% above the infation rising electricity, water and fuels costs, but also doing so since the new legislation was passed. rate. And with the 8% per year increase over in terms of managing the ever-increasing risk of The bottom line is that this new legislation the next three years, electricity consumption supply interruptions. has remoulded the way in which properties will continue to be a major and growing cost for are built, as architects/designers now need to companies, especially landlords and property Eskom has called on all South Africans to implement the new standards and requirements owners. use electricity sparingly as “the power system to ensure they meet the new legislation.” is extremely tight”. When households are Water tarifs can also be expected to rise as the requested to switch off everything but one Lower operating costs water supply in South Africa becomes ever-more light and the TV, just to keep the power on, If there is one thing that grabs corporate critical. Add to this the reality that the petrol one wonders if we really understand just how attention, it is the opportunity to save on costs. price has already breached the R13 a litre mark, tenuous the power supply in South Africa is? And going green not only saves money now, but and going green in every aspect of a company’s And do we recall the enormous economic costs also for years into the future. operations becomes a survival strategy. of rolling blackouts as experienced previously? Our water supply is similarly under massive “An interesting observation made in The In addition, a new cost factor will soon impact pressure, while the demand and supply realities World Green Building Trends report is the list on companies: a carbon tax of R120 per ton of in terms of crude oil will ensure petrol prices of expected business benefts of green building CO2 emitted will be introduced from January 1 continue to rise and rise. in South Africa,” adds Townshend. “New green 2015 and will increase by 10% per annum. Any buildings are expected to decrease operating person or company using a lot of energy will be Companies who do not embrace the green costs by 33% over five years, while green highly afected by the proposed carbon tax, given evolution – much like the companies who retrofits are expected to decrease operating the fact that the cost of electricity price could lagged behind in embracing computers and costs by 37% over the same period.” increase by 4.8c per kWh as a result of the carbon mobile technologies – will find themselves 14 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

UPFRONT increasingly unable to compete with the “Tere has been a great deal of debate around about giving up the luxuries we have become so trailblazers who benefit from massive cost- cost,” explains Heidi Franck, COO of One used to and dependent on. It is about enjoying savings and efficiencies, and the laggards Property Holdings. “Certain methods and these luxuries in a responsible and sustainable will eventually fnd themselves trying to play products utilised may have high capital costs manner, so future generations can enjoy them too. catch-up, or will simply be left behind. but will provide long-term savings in electricity and other operating expenses. New technology Unfortunately, there is no silver bullet solution Bottom line: more proftable business is generally more costly, but one must weigh that can make your buildings green overnight. All these factors add up to one conclusion: these upfront costs against lifetime savings. And Fortunately, legislators, investors and tenants don’t green business is more proftable business. Tere of course, the environmental payofs cannot be expect a building to be 100% green, nor do they are many thousands of green case studies and quantifed from a fnancial perspective.” expect sustainability to be achieved overnight. But success stories across the globe. To mention just what is certainly expected is a clear intent to go “Woolworths has saved one, close to home, Woolworths has saved more green, manifested in a clear, practical plan towards than R100 million since 2004 through their ever-greener operations which is implemented more than R100 million sustainability strategy – referred to as its Good with vigour and measured to determine success. Business Journey – which is globally regarded as one of the most innovative and encompasses since 2004 through Going green – as the phrase implies – is not a an array of energy-saving measures across its destination: it is rather a long-term journey of stores, offices and distribution centres. The their sustainability imbuing every aspect of your building and its savings have mainly been achieved through strategy” operations with a green hue and then, over time employee education and intelligent technology and with a practical plan, deepening the shade of from lighting to refrigerators. green for each activity. It is a never-ending process Sean Liebenberg, new business executive of continuous, incremental improvement, because And increasingly property owners, landlords at Excellerate Facilities Management adds: while buildings and their occupants are consuming and tenants are recognising the massive benefts “One of the other key factors to be considered scarce natural resources in any form and/or are of green buildings, as detailed in the figure when changing a business unit or building from producing waste in any form, there remains room below. traditional to sustainable is to carry out a cost- for going even greener. beneft analysis. Te purpose of this is to make sure that the investors weigh the costs of doing business It is generally accepted that green companies the usual way against the costs of keeping the tend to focus on two overarching goals: Source: McGraw-Hill Construction, 2013 environment in mind when conducting business. 1. Optimising efciency, and Lower Operating Costs (eg. Energy Costs, It is imperative to consider the social implications 2. Increasing the use of alternative energy and Total Lifecycle Costs) of implementing a sustainability programme into sustainable technologies. 76% your business and how your organisation will reap Higher Building Value at Point of Sale the future rewards. Previously, when a person So, we could define a green building as one 44% termed an organisation as being sustainable, one that is proactively and continuously reducing its would have considered the steady increase in the impact on the environment through a range of earnings of that particular organisation, but in activities that are aimed at optimising efciency 38% more recent times, sustainability of an organisation and increasing the use of alternative energy and may refer to a strategy to save costs in order to drive sustainable technologies. the bottom line, thereby making good business 36% sense. Te concept of incremental improvement means Education of Occupants About Sustainability that between where your building is now in terms 31% “Tere is a perception that implementing green of environmental performance and the vision of a methodologies costs more and is therefore not green building operated efciently and responsibly, Higer Rental Rates suitable for the average property owner. However, there are a range of strategies and activities that 27% research has shown that the costs versus benefts could be implemented to bridge the gap step-by- Increased Tenant Productivity of green building have a modest initial cost step over time. 25% premium, but that long-term benefts far exceed Start here... the incremental capital costs. In addition, research Higher Occupancy Rates 25% has proven that if green methodologies are The process starts with measuring your current incorporated during the design phase of a project, performance and then setting realistic, practical it is far more cost effective than implementing goals to improve environmental performance The cost-beneft analysis green initiatives once the building is developed.” incrementally over time. In theory, then, going green - especially in buildings - sounds like the only way to go, but So how do you go green? Measuring current performance provides a what are the costs involved? Despite some misperceptions, going green is not starting point and a baseline against which to www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 15

COVER STORY monitor results. Measuring and reporting provides reporting requirements. Ultimately, the aim is to Win-win-win situation actual numbers and figures that can produce have comprehensive sustainability reports that In reality, implementing “green” measures aimed at proof – in monetary terms – that the “green” have been third-party verifed. the good of the Planet, often result in cost reductions initiatives are producing results. This not only and higher Proft, while also contributing the social Start small facilitates buy-in from the fnancial department, responsibility of the company to the People in the directors and stakeholders, but will also build You don’t have to invest millions at the outset to communities in which it operates - the 3Ps that are momentum and keep stakeholders motivated start your green journey. Simply look at each aspect part of the sustainable tier in the King III report. to maintain and improve green initiatives. of your building and its operations and begin with In fact, they are intricately linked. Te more hues Furthermore, accurate measuring and reporting simple, no cost strategies to green each aspect. of green incorporated into a company’s activities – will provide indispensible data to keep such a and the deeper the shade of green of each activity multi-faceted project on track – ensuring that any Tis can be as simple as putting up signs asking – to lessen its impact on the Planet, the better for implementation problems or shortcomings can be occupants to turn of the lights when they leave the company’s Proft and its social responsibility to identifed and rectifed. Te data collected will a room, setting double-sided printing as the the People. also become invaluable in guiding future decision- default on printers, or switching off computer making and capital purchases. equipment and geysers when locking up. It Going green is not about taking quantum leaps, could entail sourcing greener products – such as such as replacing your entire property portfolio From the baseline data, goals can be set across environmentally-friendlier paper, paint that carries with green buildings, it is rather about never- operations to improve performance incrementally. the ECOKIND™ logo and environmentally- ending, incremental improvement – what the When setting these goals, look for realistic and responsible cleaning supplies. Japanese call Kaizen. practical options, taking into account the cost of implementing each option, the potential benefts The successes achieved through these simple, Continuous, incremental improvement in reducing and how quickly it will deliver results. Also no-cost strategies will reduce resistance to your company’s impact on the environment and the consider potential risks and ways to mitigate them. rolling out more ambitious undertakings, while overall impact of your operations on society, while the savings will justify – and even fund – more achieving measurable reductions in operating costs, Your goals should then be broken down into aggressive strategies, such as fitting energy- is true sustainability. And sustainability means lower achievable action steps with deadlines, assigned efficient lighting throughout the building or risk and greater resilience, which translates to better roles and responsibilities, and monitoring and investigating alternative water heating solutions. long-term business performance for your company.

THERMAL RESIST ANCE V ALUE P56143 Isover corporate 2_REPRO.indd 1 2013/05/14 1:11 PM

NEWS ALERTS BY MONIQUE TERRAZAS In The Property Headlines The Good The Bad The Ugly Buy-to-let boom on the cards Joburg clearance certificates Bank of America sued by debacle government Bolstering prospects for buy-to-let investors, The lengthy period it takes to get clearance In August, the US Government sued the Bank Generation Y - most of whom are still in their certifcates from the City of Johannesburg to of America for defrauding investors in the sale 20s – is also rapidly also becoming known as facilitate property sales has become a serious of $850 million in mortgage-backed securities, “Generation Rent” in property circles. issue. Instances have been reported in which alleging that the bank deceived investors regarding it has taken more than eight months to get the riskiness of the mortgage loans backing the According to Berry Everitt, MD of the Chas a clearance certificate from the council, securities and intentionally avoided performing Everitt International property group, many signifcantly delaying the transfers of property adequate due diligence, leading to investor losses members of Gen Y are too weighed down by in the Deeds Ofce. In Cape Town, clearance of more than $100 million. According to media student loans, other debt and a lack of savings certifcates are usually obtained within four to reports, the mortgages in question were sold as to buy a home, while others are simply not ready five days. Some conveyancing legal practices “prime” loans, implying a low likelihood of default to settle down, preferring to rent. Either way, have set up separate divisions to deal with and signifying “a safe and conservative investment”, the trend is positive for buy-to-let property the problem, while others are charging a which “justifed” the high prices of the investments. investors. consultant’s fee of around R950.00 to obtain However, at least 23% of the mortgages in the clearance certificates, strongly suggesting to securities have defaulted or were delinquent as at Te average age of frst-time buyers in South clients to make use of these consultants as it June 2013. Te government claims that more than Africa has shifted from about 27 years of age “can take the council a very long time to issue 40% of the loans in one of the bonds did not meet to 35 over the last 20 years, which means that a fgures if we do not make use of a consultant Bank of America’s own underwriting standards, signifcant number of young people are staying and this will cause unnecessary delays in the with “glaring” problems such as overstated income in the rental pool for at least eight years longer transfer process”. for the borrowers or fake employment data, than they used to. Te rental demand has also which made them “wholly inconsistent” with a been boosted since the 2008/09 recession by There can be little doubt that the issue will be prime rating. homeowners who had to sell their properties to exacerbated by what has been termed a “bizarre” relieve fnancial pressure and have been unable move by the City of Johannesburg, which has Unsurprisingly, the Bank of America denied or unwilling to buy again. objected to the new valuations of almost 63 000 it was responsible for the losses, claiming properties on the recently released general that the “prime” designation was justified, “And the pressure on supply continues to grow, valuation roll - after the 3 May 2013 cut-off noting that the investments were sold to because there has been so little new housing date for objections. Tere are now some 88 000 “sophisticated investors who had ample access development in the past five years,” adds objections – an astounding 11% of the valuation to the underlying data” and saying that the Everitt. “In short, with interest rates at their roll – which begs the questions: Did the valuers loans in question had performed better than lowest in almost 40 years and the demand for do a proper job in the frst place? What are these similar loans originated and securitised at the rental accommodation set to keep growing - objections going to cost the council and, more time by other fnancial institutions. Te bank especially when interest rates start to move up importantly, the rate payers? And how will blames the losses on the general downturn of again – and with annual rental yields rising and 88 000 valuation objections be handled by a the market and economy. property value increases starting to get ahead of council who is already struggling just to issue infation again, the current market is ofering clearance certifcates? In parallel action, the Securities and Exchange some outstanding buy-to-let opportunities.” Commission also levelled fraud charges against the bank over the same 2008 mortgage security oferings. 18 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 19

www.reimag.co.za

REI Residential Township House Price Keeping Up Maintenance Inter-Provincial Repeat Home Growth Ahead of Suburbs Buyer Migration Trends Areas formerly classifed as “Black Areas” under In recent months there has been a marked According to FNB, household mobility appears Apartheid Era classifcations have outperformed increase in the number of people buying into to be rising over the long term, with a greater the former White “suburbs” in terms of house multiple unit developments, gated estates and portion of households relocating to more far of price growth for much of the period since 2006, sectional title schemes – not for their own use destinations, predominantly for work purposes. playing catch up of a very low price base. In the but as an investment. While this is a welcome FNB’s research also confirms the Western 2nd quarter of 2013, the FNB Former Black trend, it has to be accepted that it can lead to Cape’s apparent competitive advantage, given Township House Price Index for Major Metro problems, says Bill Rawson, Chairman of the the lowest percentage of repeat buyers leaving regions rose by 8.4% year-on-year. Tis was mildly Rawson Property Group. the province, as well as by far the strongest net higher than the 6.3% recorded for the entire inward migration rate of repeat buyers from market in the six major metros (Ethekwini, Cape The main problem, he says, is that certain other provinces. It is not surprising as the Town, Nelson Mandela Bay, Ekurhuleni, Joburg investors, while enjoying the current scenario province’s economy is the second largest after and Tshwane). Townships markets represent the in which rents are rising fast year-by-year, Gauteng, and also boasts the second highest most affordable part of the residential market, tend to be very slack about ensuring that their growth rate, slightly behind that of Gauteng. with an estimated average transaction price of properties – as well as those of their neighbours Cape Town’s combination of good economic R281 953 as at the second quarter, and have and communal grounds – are properly opportunity along with a quality lifestyle shown to be a bit more cyclical than the overall maintained. “Today’s buy-to-let investor is appears to be the winning recipe in attracting metro residential market. inclined to see his investment as being in much both wealth and skills to the province in the same category as a bond or share purchase. relatively abundant quantities. He sees no need to be closely involved with it.” Valuable Input Bill Rawson, Adrian Goslett, Samuel Seef, Brian Wilkinson, Gerald Leissner, Chairman, CEO, Chairman, CEO, Chief Executive Ofcer, Rawson Property RE/MAX Seef GBCSA Arrowhead Properties “As a rule of thumb, I believe ““It was not that long ago ‘Tere is a notable shift “We are confdent that “We see the residential that not less than 5% and up that a desirable home in buyer demographics the green building market as an important in a good location may in the more afordable movement in South new avenue for growth. to 10% of the rentals each have sat on the market and middle-class Africa will continue this And it ofers great month should be set aside for months. However, suburbs in the main upward trajectory and diversifcation from for maintenance purposes.” that seems to have seen a metropolitan areas. that we will increasingly commercial property.” turn around with many In some instances, see green building sellers receiving ofers more than half of all practices becoming the in a much shorter time buyers are now from norm.” frame.” the black middle class demographic group.” www.reimag.co.za September 2013 SA Real Estate Investor 21

GETTING STARTED BYJOHN ROBERTS Get Your Green On And think outside the box xponential electricity price hikes and a growing world view on renewable energy Eare forcing people to rethink their power supplies. Tis opens possibilities to seek electricity solutions outside the box - when Eskom is asking for price hikes that will more than double electricity costs over the next five years, why continue using them as a supplier? are still caught green building techniques. The Globally, the shift to green energy, specifcally into paying the Economics of Green Building course solar energy, is gaining traction. Photovoltaic fixed costs on their was developed in response to market trends and (PV) solar panels are attractive and relatively utility bills, solar geysers industry demands and emphasises the necessity easy to install; can be designed for personal substantially lower the variable costs. Te question for breaking out of the traditional circle of blame preferences and, once the initial costs have been then facing consumers is can they aford to pay and considering sustainable investment decisions paid of, provide households with free electricity. upfront for their electricity consumption and in for the short, medium and long - term. In their Globally solar energy is an appealing renewable doing so, both save their pockets in the long - run paper “Why Invest in High-Performance Green energy as it is clean, emission and noise- and contribute towards saving Earth? Buildings?” Melissa O’Mara and Shan Bates free, sustainable, safe and cost effective. PV argue that property investors and developers technology converts solar energy to electricity Less tangible, but no less viable, is the potential are constantly seeking new strategies to deliver and should not be confused with solar-powered that houses and ofce blocks efectively powered by sustainable buildings that attract tenants and geysers. Whereas solar thermals generate hot solar may hold a competitive advantage when that buyers, while maximising the green value. water, solar cells generate electricity. property comes to the market. The fact that the electricity consumption is included in the cost of the Investments in green buildings can produce Rather the environmentally-friendly technology home could prove to be that x factor that generates measurable fnancial value, such as increased rental provides long-term solutions to South Africa’s a return on investment substantially higher than rates and asset value, reduced risk of depreciation electricity issues. The modules use sunlight- the initial cost of the installation - and that is after and higher tenant attraction and retention rates. generated electricity fed into the national grid the owner has beneftted from free electricity once when not consumed and drawn down for personal those costs have been recouped via the savings. On the other hand, tenants want buildings consumption at night. that attract and retain the best talent, foster It is not a far-fetched concept. Properties within collaboration and innovation and increase Average households consume around 5KWh gated communities already carry premiums on employee productivity and well-being. Tey also of electricity annually and the challenge comes in their selling prices, so the future may well hold the need to reduce their operating costs, energy use tackling consumers’ hurdles around the upfront same beneft for solar homes. and environmental impacts - and these are factors costs. Installing sufcient panels to fully operate a that O’Mara and Bates argue assist organisations household of solar energy costs about R100000, The reality is that globally buildings are to meet their corporate social responsibility goals. but it also translates into an investment fxed for responsible for a third of all carbon emissions 40 years. Eskom’s escalating electricity price hikes and thus represent the lowest hanging fruit in Sustainability, green approaches and thinking potentially “pay of” those initial costs via savings the worldwide fight to reduce those emissions. diferently are no longer just the buzzwords fung to the monthly electricity bill within eight years at Studies have presented empirical evidence that out by new-age thinkers. Tey are the elements on current levels and less as the parastatal successfully high performance - or green buildings be they which the property world will hinge in the years lobbies for spiralling increases. office or home - can not only be delivered at ahead and getting to grips with the costs and prices comparable to conventional buildings, implications now may well pay dividends into the Solar geysers are equally as effective in but that investments can be recouped through future, as it is always the forerunners who make ofering homeowners savings to their electricity operational cost savings. Consequently, the Green the profts. RESOURCES bills. Geysers account for around 40% of the Building Council of South Africa now offers a household electricity bill and, while consumers course demonstrating the fnancial motivation for Just Property Group 22 September 2013 SA Real Estate Investor www.reimag.co.za

PROPERTY CUSTOMER SERVICE GROUP EXCELLENCE www.reimag.co.za

STRATEGIES BY KOOS DU TOIT Does High Risk = High Returns Or is low risk better? t is a myth that buy-to-let property is a high risk investment. Tis is because, unlike many other 1. Buy-to-let property investment produces Iinvestments, buy-to-let property investment an ongoing, passive and inflation-linked allows investors to manage – if not eliminate – all the monthly income as rentals increase in line major risks involved. with inflation each year. After expenses, the rental income goes straight into the This, however, may concern investors who still investors pocket – there are no fees and believe that high risk equals high return. But hidden charges that can signifcantly this, too, is a myth that has been perpetuated by afect investment performance. investment companies and asset managers – and certainly not in the interest of their investors. 2. In addition to this monthly income, buy-to-let property also High risk doesn’t always equal high allows investors to earn capital returns growth on the value of the High risk investment does not guarantee a high property as property prices increase return – it only provides a possibility that you could over time. make a lot of money, with far less emphasis on the fact that you might not… and that you actually face a 3. Buy-to-let property further allows signifcant risk of losing your money. investors to apply gearing or leverage to acquire the property asset. To acquire a R500 000 property, Te reason why high risk investments ofer high you may need no more than a deposit of R50 000, If one takes a R500 000 property as an example, returns is not that high risk delivers guaranteed high and in some cases, you will need no lump sum requiring a R50 000 deposit (the actual out-of- returns, but rather that no one will invest in a high investment. This makes a massive difference to pocket investment made) and one assumes a R4 risk investment vehicle – with a signifcant possibility the return on investment fgures, because you are 000 per month rental income, 10% interest rate, of losing the money invested – unless a promise of earning returns without investing much – or even 5% capital growth and 8% infation of costs and a high return is attached to it – and this promise of any – of your own money. annual rental, the returns achievable are detailed in a high return is no more than a possibility that the the textbox below. Spectacular returns investment could yield a high return. In fact, if the returns on a buy-to-let property And that is a high return on a low risk investment! Low risk, high returns investment are correctly calculated, taking into Of course, next year and each year thereafter, these Tere is one investment – buy-to-let property – that account the monthly income, the capital growth returns on investment will grow, because capital is truly low risk, and yet produces high returns, if and the efect of gearing, the returns produced by growth is compounded each year and, as the rental done properly, for three simple reasons. buy-to-let property is nothing short of spectacular. increases every year, the out-of-pocket investment Year 1 per year continues to diminish. After a few years, Returns the rental income exceeds the bond repayments Annual capital growth (R500 000 x 5%) = R25 000 and the other costs, which then adds rental income Rental income (R4 000 x 12 = R48 000) – not included as covers bond Total Returns = R25 000 to the capital growth in the returns section, and Out-of-pocket investment eliminates the out-of-pocket investment, and the Deposit = R50 000 result is truly spectacular returns on investment. Bond repayments (R4 000 x 12 = R48 000) – not included as covered by rental Interest, levies +taxes and other costs not covered by rental income = R16 000 Total Out-of-pocket investment = R66 000 Infnite returns Total return on R66 000 investment = 37.8% Te longer an investor keeps a property, the higher Year 2 the return on investment. In fact, if the property Returns is acquired in the right trust structure, so that it Annual capital growth (R525 000 x 5%) = R26 250 continues to produce these returns for generations Rental income (R4 320 x 12 = R51 840) – not included as covers bond Total Returns = R26 250 beyond the investor’s lifetime, a buy-to-let property Out-of-pocket investment can produce infnite – or immeasurable - returns. Bond repayments (R4 000 x 12 = R48 000) – not included as covered by rental Interest, levies +taxes and other costs not covered by rental income = R16 850- RESOURCES Total Out-of-pocket investment = R16 850 Total return on R16 850 invested = 155.7% P3 Investment Group 24 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

FINANCE BY KOOS DU TOIT Avoid Gearing Gaffes Don’t gear beyond your afordability interest rate (the long-term average) before buying a property. Gearing beyond value While it is far less common since the credit crunch, a few years ago it was possible to gear a property investment 108% and even 118%. Tis Negative gearing meant that the investor could borrow 108% or Negative gearing refers to the 118% of the market value of the property asset, very common situation in which and often this was allowed to ensure the investor an investor acquire a buy-to- could not only pay the purchase price, but also pay let property using gearing, ie a the transfer duties and other costs associated with mortgage loan, but the income the property purchase. produced by the property (in the form of rental income) is less than Many investors burnt their fngers when interest the total monthly expenses (bond rates rose and property price growth stagnated, repayments, rates and taxes, management and these investors found that they could no longer fees, etc) which means that the investor must aford the higher bond repayments and could not fund the shortfall between the rental income sell the property at a price that would cover the and the total expenses from his/her own pocket outstanding bond amount. any investors, realising the power of each month. gearing (borrowing money to invest in Similarly, many investors took out second Man asset) and the spectacular returns Negative gearing is, in the case of buy-to-let mortgages on a property – cashing in on the equity that it delivers, step into a common, but entirely property, a temporary situation, because the created as the value of the property increased (at as avoidable, pitfall: gearing beyond their afordability rental income increases year after year, while the much as 25% per year at the height of the property or beyond the security ofered by the asset. bond repayments will remain similar, barring boom) and their outstanding bond amounts interest rate fuctuations. As a result, the shortfall remained static. However, as property prices What is gearing? amount decreases year after year until the property corrected after the heady boom days and interest Gearing, or leveraging, is also referred to as using investment reaches break-even point, at which time rates skyrocketed, many investors found themselves “Other People’s Money” (OPM) in wealth creation all the property expenses are covered by the rental similarly unable to aford the bond repayments and circles. Essentially, it simply means borrowing income. Ten, as the rental continues to increase unable to sell the property for an amount sufcient money to invest in an asset, such as using a year after year, the property asset begins to produce to cover the outstanding mortgage loan. mortgage loan to acquire a buy-to-let property. a growing monthly proft. Smart gearing If you are acquiring a property for R500 000, Negative gearing becomes a major risk if the Gearing is a wealth creation strategy used by the and obtain a mortgage bond for R500 000, that is investor did not carefully analyse his/her cash world’s wealthiest individuals and institutional 100% gearing of the investment. Recently, it is far fow situation to ensure that the shortfall amount investors. It is without a doubt one of the most more likely that the mortgage lenders will require a can be carried comfortably, even in the event of powerful strategies investors can use to acquire deposit. If a 10% deposit is required, the result is a interest rate increases, which could signifcantly income-generating assets without access to 90% gearing of the investment, while a 20% deposit increase the monthly shortfall amount. This signifcant capital and it exponentially increases requirement will result in 80% gearing. risk is magnifed when an investor has acquired the return on investment. multiple investment properties with negative While gearing is a powerful force in creating gearing, and even a single interest rate hike However, gearing must be applied with care, wealth, exponentially increasing the returns on renders the increased shortfall amounts on including careful cash fow analysis – incorporating investment, responsible gearing is absolutely several properties unafordable. a generous bufer to absorb interest rate increases as crucial to property investment success. Gearing well as unexpected expenses – and common sense beyond your affordability can result in serious Responsible gearing requires a thorough cash to ensure the gearing does not exceed the security cash flow problems, while gearing beyond the fow analysis and stringent cash fow management, ofered by the value of the asset acquired. security ofered by the value of the property can be and smart property investors build in a bufer by RESOURCES a shortcut to disaster. calculating their cash fow projections on a 12% P3 Investment Group 26 September 2013 SA Real Estate Investor www.reimag.co.za

KAPSTADT INTERNATIONAL PROPERTIES ADVERTORIAL Elisabeth and her daughter Lisa Kapstadt’s homely offce at 11a De Lorentz Street, Gardens house home heart apstadt International Properties is a boutique real-estate company that specializes in property sales and rentals in the City Bowl of Cape Town – one of the oldest and most sought after residential areas of South Africa. Founded by Elisabeth Kretschmer in 1991, as a small family business, the company has grown K into one of the most successful real estate companies in the City Bowl. The Girls at Kapstadt life and work ethics are best describe in a this meaningful quote by James Mitchner: “The master in the Art of Living… makes little distinction between his work and play, his labour and his leisure, his mind and his body, his information and recreation, his love and religion. He hardly knows which is which. He simply pursues his vision of excellence at whatever he does, leaving others to decide if he is working or playing. To him he is doing both”. Kapstadt International Properties is renowned for always having the best properties and for the caring and supportive manner in which we work with our clients. We enjoy a signifcant share of the property market in the City Bowl – all thanks to the generous support of our local, national and international network of clients. We look forward to hearing from you and be of assistance in whatever property needs you may have. Yours sincerely Elisabeth Kretschmer 11a De Lorentz Street Gardens Cape Town +27 21 424 2211 +27 83 252 4562 [email protected] house home heart www.kapstadtinternational.co.za +27 21 424 2211 www.reimag.co.za

STRATEGIES BY MALCOLM MCCARTHY Breaking with Assumptions Greening Social Housing in South Africa eople involved in Social Housing in South (SHIs) using a capital subsidy from government. Tis reality has given impetus to thought and Africa are asking many tough questions Many of the 30 000 social housing units developed action that is now incorporated in the slogan the Pabout the meaning of greening of the in South Africa are in medium density projects ‘Greening of Social Housing’. Te slogan is easy, sector. Te reconciling of cost and impact is very occupied by households with monthly incomes the reality of delivering on it more complicated. important given the tight financial margins in between R2000 and R7500. Maintaining As organisations like the National Association the sector. While there is a body of knowledge affordable rentals, within the tight constraints of Housing Associations (NASHO) starts to emerging around commercial properties this is far of the cost of provision and management and the untangle the challenges involved, the dimensions less so in the medium to higher density residential levels of government subsidy, is increasingly a become clearer. The glib explanations that rental market. So now key players in the Social challenge even to the most entrepreneurial of Social greening reduces costs; that savings from greening Housing sector are starting interventions to better Housing Institutions. can help cover the cost of the capital investment; understand both what should and can be done that green education automatically changes about greening the social housing sector. This challenge is compounded by the rising behaviour are challenged by the reality. utility charges, specifically electricity. These are Te intent of Social Housing is to provide good forcing more tenants to leave this formal housing The initial and ad hoc attempts to undertake quality rental housing affordable to low and option and return to backyards and other less more proactive greening of the social housing moderate-income households in well-located formal housing provision. Tenants say that it is units and buildings has to date concentrated on the parts of our cities. Te housing stock is developed not the quality of the accommodation, nor the substitution of electrical geysers by solar heated and managed by strong entrepreneurial non-proft management service, nor even the rentals, but the water or heat pumps. Te limited monitoring of Social Housing Institutions rapid increase in utility costs that force them into an the impact of these has raised problems regarding unwanted choice. the increased capital costs that accrue to the project development and the benefts accruing to the tenant. So while on the one hand it achieves greater afordability for tenants, on the other hand the Social Housing institution is not receiving the savings to repay the capital outlay. At the same time the government’s capital subsidy stays the same and so there is no financial incentive to pursue the capital aspects of greening. Ten, too, the installation of heat pumps - while reducing the unit costs of hot water - is not necessarily producing savings but rather increased consumption of water. It is clear that beyond the ‘greening’ platitudes, the sector needs greater understanding of the financial, economic and social bottom lines to its greening efforts. This understanding should then help frame the necessary policy, regulations, f inancial mechanisms, partnerships and action programmes to achieve well-defined and realistic ‘greening’ objectives. So how does the sector follow that route? In November 2012 NASHO, with support from Agence Francaise 28 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

RESIDENTIAL Developpement (AFD), brought together Guide is refecting the growing importance of the social housing and the green networks the SHIs’ community development initiatives, in a workshop that could define the research like that of the Johannesburg Housing questions and outline the possible mechanisms Company linked community development to make ‘greening’ of the sector more successful. arm ’Makhulong A Matala’ which ‘…runs interesting programmes involving residents in The workshop identified a number of issues food gardening and waste management in the including the tension between capital cost Johannesburg inner City’. and returns; the impact of energy cost savings on affordability of targeted tenants; the A key theme that threads through the Guide is understanding of what capital products have the how little we know about the real dynamics and best efect within the tight frame of fnancing; impact ‘greening’ can have in the sector. Trough lack of established fnancing mechanisms; and recent networking between the social housing forms and efectiveness of tenant engagement and the greening sectors a project has emerged in understanding consumption issues but also in intended to give more practical answers on income generating green activities. these dynamics and impacts. Te ‘Green Social Housing Building Project’ is a joint initiative In parallel to the workshop was the of NASHO and the WWF – SA and fnanced development of the ‘Green Guide for Social by the Social Housing Regulatory Authority Housing institutions’. It recognises that the (SHRA) and the Nedbank Green Trust. organisational base of the Social Housing Institutions provides the best point to respond Its intent is to help fll the information gaps and to the challenges. Te Guide notes the lack of use this to inform the ‘greening’ policy for social properly researched and understood dynamics housing and highlight the mechanisms that can of ‘greening’ particularly in the residential sector ensure it happens. Te two year project involves and more so in the residential space occupied by the development of two Green SH buildings, social housing. In focusing the thinking of Social one new-build in Johannesburg and the other Housing institutions it posses the question: a retroft in Cape Town under the management of two well-established SHIs, Madulammoho “SHIs need to be clear on what they want Housing Association and Communicare. Each out of greening. Is the aim simply to comply will manage their building alongside that of stock with regulations at the lowest possible cost, is not benefting from green investment. Te project it to replace a few energy inefcient fttings in will track, monitor and evaluate the impact of the hope of bringing down the electricity bill, the green investment and initiatives. This will or is it to go all the way in weaning ourselves concentrate on the range of capital products and from grid dependency and become totally self their impact on value for cost of investment; sufcient in meeting our energy needs? Is it only the financing needs to achieve affordability; about energy?” and the involvement of tenants and the broader community. Spanning these themes is the better It uses a non-prescriptive approach in understanding of the actual consumption and considering a full spectrum of possibilities cost savings as well as the household livelihood that go far beyond merely ‘energy’. Building opportunities in money and kind for tenants around the sustainability of the Social Housing through the various interventions. Institutions, and the stock they manage, it knocks the capital options against the reality All this information is of little value if it is not of what is afordable within the total building fed back into the policies and the implementing lifecycle. It highlights the centrality of the SHI frameworks of the sector. More than that, the in the defning and driving of viable greening initiatives must ensure that low and moderate- approaches and the essential part that tenants income households beneft from the innovations have to play in making the savings and making and therefore can stay to enjoy the fruits of the the green innovations work. investment. Tere is still a long way to go but the untangling has started. It does not neglect the engagement of these tenants in the income and livelihood activities RESOURCES around recycling and food production that can also improve afordability. In doing so, the NASHO www.reimag.co.za www.reimag.co.za

SMART MOVES BY LEW GEFFEN How To Build Your Green Home Without paying an arm and a leg omeowners affected by dramatic certifcations were awarded to new commercial water. Fitting a solar-powered geyser is one hikes in electricity costs over the developments in June 2013, bringing the total of the most popular cost-saving greening Hpast fve years are increasingly drawn number of Green Star-rated buildings in South measures taken by owners of residential to homes built according to green building Africa to 37. In order for business premises to property, and because Eskom ofers a rebate on practices, says Lew Gefen, Chairman of Lew be awarded green stars, the various categories solar-powered geysers, it’s also a very attractive Gefen Sotheby’s International Realty. of commercial buildings have to adhere to option for greening a home. strict guidelines extending beyond the heating Eskom says that in real terms, electricity of water. According to Eskom-accredited solar prices have risen by 78% between 2008 and heating specialist Mike Bekker, if a home’s 2011. In February this year South Africa’s In terms of residential property, multi-unit monthly electricity payment amounts to R2 energy regulator granted Eskom a further developments like apartment blocks built after 000, a solar-powered geyser could save a home average 8% annual increase in electricity 2011 are rated using a points system. Tis is as much as R640 on power bills a month. tarifs. based on the impact their development has Taking into account Eskom’s rebate, which is on the ecology of the surrounding area and in the region of R4 000 on a R15 000 geyser As larger numbers of younger, eco-savvy and on their proximity to mass public transport, that can supply hot water to a family of two cost-conscious frst-time buyers come onto the among other things, in addition to their eforts adults and two children, most geysers pay for market, realtors are seeing a steady increase in to reduce hot water consumption by using themselves in three to four years. interest in homes with energy-saving fxtures. efcient fttings and to lessen the greenhouse gas emissions of the water heating system they As such, a solar-powered geyser is probably Tis interest in “green” homes is also driven use. your best green investment to make a home by increasing public awareness of green more attractive to potential buyers or tenants. building practices. Since the new building Te general SANS 10400-XA Energy Usage Tere are, however, other ways to add value standards regulations were put in place in requirement that applies to all buildings is that to a property through the reduction of energy 2011, developers and owners of all residential, a minimum of 50% of their hot water heating bills. And if you’re handy at DIY, installing public, commercial and retail buildings have requirements should rely on a source other them yourself is simple. been required to invest in energy-efficient than electricity – such as solar heating and technology for the provision of hot water. heat pumps. Insulation is one example. A typical uninsulated home loses up to 35% of its energy According to the Green Building Approximately 39% of South Africa’s through the ceiling, says insulation specialist Council of South Africa, six green building domestic electricity usage goes to heating Ian Peddie. Heaters, which add hundreds of 30 September 2013 SA Real Estate Investor www.reimag.co.za

Collection Eternity : Low Solar Absorption Powder Coatings Interpon D2525 ECO powder coating technology for Green Building AkzoNobel has always been at the cutting edge, developing products that improve sustainability and diminish environmental impact. In response to the problem of urban heat island and global warming, AkzoNobel is proud to present the Eternity Collection which uses Interpon D2525 ECO Technology. This unique range of powders refl ect the solar infra-red radiation, preventing transmission and convection of heat. This means: • Less heat transferred through window frames, reducing the need for cooling • Less heat radiated into the atmosphere, reducing heat island effect Interpon D2525 ECO powders achieve this by: • Innovative coating pigments that result in lower surface temperatures, even darker color • Unlike traditional coatings, refl ecting a large part of the invisible near infra-red radiation (NIR) Eternity - the Essential Collection for Green Building We believe that Collection Eternity will become the fi rst choice for architects, not only helping to reduce energy bills but also providing the following benefi ts: • Building life cost effi ciency • Exceptional weathering durability. Part of the D2000 range, 21 year proven track record. • A guarantee of up to 25 years • Exceptional heat refl ective performance • Modern color range • Qualicoat Class 2; AAMA 2604 compliance • Contribution to “green building” certifi cation • SMaRT accredited products • Project Guarantee available through Interpon Approved Applicators Interpon D2525 ECO Low Solar Absorption Powders refl ect up to 45% of the total incident radiation energy from the sun. For more information on Eternity - The Essential Collection for Green Building speak to your AkzoNobel Powder Coatings representative. Tel: 011 861 0500 Email: [email protected] Website: www.interpon.co.za www.reimag.co.za And fi nd out more at: www.interponbuildings.com

SMART MOVES rands a month to energy bills, are usually used rubber washer onto the shower head to replace this lost heat in the winter. mount, and screw in the new low- fow shower head. Eskom says that insulating a ceiling using blanket insulation can make a home up to 5°C Low-f low showerheads are warmer in winter and 10°C cooler in summer, available at most bathroom dramatically cutting the cost of heating and equipment and DIY shops and cooling. Blanket insulation, like a solar- cost between R100 and R800, powered geyser, will also pay for itself over depending on their features and the time. Depending on the size of a home, at a materials they’re made from. cost of around R60m2, including installation, it would probably take insulation in the region Another major source of domestic of two years to pay for itself. After that, water use is toilet fushing. While homeowners or tenants will save thousands of this doesn’t contribute to your rands in heating and cooling. energy bill, it does contribute to your water bill – and your carbon Replacing traditional incandescent light bulbs footprint. Older toilet cisterns hold with energy-saving light bulbs can also lead to 9-12 litres of water, while modern great savings over time. The most common toilet cisterns hold about six litres, energy-saving bulbs are compact fluorescent meaning you stand to save more lamps (CFLs), halogen bulbs and light water if you have an older toilet. emitting diode lights (LEDs). LEDs are the Converting your toilet to a dual- most energy-efcient and most durable option, fush (long and short fush options) using 90% less energy than CFLs and lasting or multi-fush (fushes as long as you up to 20 years. Tey are, however, also the most hold the handle down) can result in expensive option: a standard LED candle bulb savings of up to 20% on your water costs in the region of R150. bill, according to sectional title expert Rob Paddock. Compact fuorescent light bulbs (CFLs) are up to 75% more effective than incandescent Installing a dual flush system bulbs and last 8-10 times longer. Replacing costs in the region of R1 500, while incandescent bulbs with fuorescent bulbs in an converting your toilet to a multi- area where lighting is required for long periods flush system is quite simple and of time can save R152 a year, according to inexpensive as an existing toilet can Eskom’s calculations. be retroftted at a cost of between R100 and R450. You can reduce power bills by reducing hot water usage, too. Te American Environmental A very inexpensive alternative Protection Agency (EPA) estimates that is to place a bottle or bag that letting a hot water tap run for fve minutes uses displaces water in your cistern. You as much energy as it takes to light a 60-watt will save the amount of water the lightbulb for 14 hours. Showering and bathing bottle or bag displaces. use the most hot water in the average home, so the bathroom is the best place to start when it These seemingly small amounts comes to reducing the energy you expend on add up over time and, combined heating water. with savings from solar-powered water heat ing a nd cei l ing A low-flow showerhead is an inexpensive insulation, can add significant water saver that is easy to install. Te amount value to an investment property, of water used is reduced either through aeration paying off handsomely both or by reducing the size of the individual streams in cost savings and a dramatic of water, meaning less water has to be heated. increase in perceived value. Fitting a low-flow showerhead can save in RESOURCES the region of R110 a year. To do so you need to unscrew the old showerhead, thread a new Sotheby’s Realty 32 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

IMPROVING BY ANTONELLA DESI Going Green In The Kitchen Energy-efciency ofers huge savings he environmentally friendly kitchen begins with eating green, but it certainly doesn’t end there. Energy- and water- efcient appliances are not only good for the pocket, but they are also a good choice for the planet. Liam Gawne from TMiele outlines what you should look for when selecting green appliances for your home. Changing to energy-efcient appliances is the money, the last thing you want to waste it on substantial amount over the long term.” environmentally responsible thing to do, and is your electricity bill! It has been estimated it will save you money to boot. Says Liam that appliances can use up to 20% of your However, with all the appliance manufacturers Gawne from leading appliance manufacturer, total electricity bill – so changing to energy- jumping on the “green” bandwagon and touting Miele: “Let’s face it – if you are going to waste efficient appliances can save you quite a their eco-friendly credentials, it is not always 34 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

RESIDENTIAL easy to know which ones are legit. Gawne ofers then be sure to opt for the hobs with a ceramic calculates the energy efciency of a dishwasher the following tips on what to look for. surface, as they do a better job of transferring according to the number of place settings the heat to your food. it can hold. Miele’s Edition 3D Eco model Understanding energy-efcient boasts an incredible A+++ energy rating, and ratings • Gas hobs are considerably more energy an impressive water consumption of only seven South Africa doesn’t have its own energy efficient – they boast a much better heat- litres per cycle. There are a number of other label, so your best bet would be to look out for transfer ration, and the heat generation is features present in many modern dishwashers the European Union (EU) energy label. This instantaneous. Gas hobs are also considerably that further add to the energy efciency of the label is found on a selection of white goods less expensive to run when compared to model in question. Quick-rinse cycles are also and other products, and they are designed electrical hobs. However, if you opt for a useful, especially if you are on metered water to help consumers understand how energy gas hob, it is imperative that you choose an use. efficient an appliance is. Says Gawne: “The efficient extractor, which will be needed to Energy-efcient washing machines EU energy- efciency label clearly displays the remove the combustive by-products that the energy-efciency of the appliance and rates it in gas will introduce into your home. Energy-efficient washing machines use the terms of a set of energy-efciency classes – from least amount of electricity possible, and they A to G, with A being the most energy efcient, • Induction hobs are the hobs of the future – if are able to considerably cut water consumption and G the least efcient. Te labels also provide green is what you are after, then induction is the as well. Although energy efcient models may other handy information that consumers can use answer. In an induction hob, heat is transferred cost a little more from the outset – their energy to make comparisons between various makes directly to the pan through high-tech magnetic efciency means that they pay themselves of and models.” He explains that in an attempt to felds, leading to very little heat wastage. Heat a number of times during their life cycle. He keep up with advances in energy efciency, A+, is generated incredibly quickly, and it is quick notes that it is also important that a machine A++ and A+++ grades have been introduced for and easy to adjust. Also, since the heat needs boasts an eco-programme for lightly soiled various products. a metallic surface for conduction, when the laundry: “Colder washes mean less electricity pot is removed, then the surface immediately is used – for example a 20°C wash is 75% more Consider the carbon footprint becomes cool to the touch – making it safer as energy efcient than a 60°C wash. A truly green appliance however, is not just well. Te only drawback to induction hobs is about its energy-efficiency ratings – you also the fact that they are comparatively new to the Another way to save is to use green products in need to consider the sustainable practices of market, and therefore only high-end models are your home. But what makes a green product? the manufacturer, as well as the overall carbon available. Tey also require the use of specifc Truly sustainable products are those that not footprint of the appliance in question. cookware made from stainless steel, cast iron only do not damage, but also positively support or enamelled iron – so you will most probably the health of people and nature on which all Energy-efcient refrigerators require a whole new set of pots and pans as well. life depends. But how does one use this lofty “If there is one appliance that you would like ideal in deciding how to determine the best to upgrade to a more energy-efcient model, Energy-efcient ovens green product to use? We can begin by looking then the fridge should be the frst port of call. Te energy efciency of an oven is largely dictated at individual characteristics of what makes a Since refrigerators run 24 hours a day, seven by its size, so it is wise to choose a smaller unit that product green. A major factor affecting the days a week, they tend to use up a lot of energy will meet your needs. If you have the occasional sustainability of products is whether they use – in fact, it is estimated that they account for need for larger oven capacity – it is a far better renewable or non-renewable resources and around 10% of our homes’ total energy use,” solution to opt for two smaller ovens, rather than whether they promote the cyclic use of those explains Gawne. Of course, he says that when one large oven. In this way, you will save electricity resources ie by using recycled materials in them selecting a fridge you should look at its energy by using the small oven most often, and you can and being completely recyclable themselves efciency label frst: “If it is an energy efcient use both small ovens when you require larger oven either within natural cycles such as composting refrigerator that you are after – the fridge capacity. or within ‘technical’ cycles such as reuse, you choose should boast a minimum of an A remanufacturing or recycling energy rating.” When making your oven selection, be sure to choose a convection oven, in which a fan Going green is a new way of living which will Energy-efcient hobs continuously circulates the heated air around the save you money on the long run and as trite as The hob is the only kitchen appliance that food. In this way, the temperature and cooking the saying is, save the planet as well. With just ofers a fuel option – electricity or gas. Both times are reduced, and in so doing, so is the a few small changes in your kitchen and home options have their pros and cons: amount of energy that is required. Also, look for you can make a big diference to your bottom ovens with a self-cleaning feature, as these models line and the environment, so why not start • Standard electrical hobs are much less are better insulated, which means that they are today? energy efcient than gas hobs – they take some more efcient at maintaining oven temperatures. RESOURCES time to heat up and cool down, and a lot of the Energy-efcient dishwashers MIELE heat generated is not transferred to the food at all. However, if this is all you can aford, For dishwashers, the EU energy label Ecospecifer www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 35

IMPROVING BY ANTONELLA DESI green Says Craig Taylor from Bathroom Butler: “Even though many believe that a heated towel rail isn’t an essential bathroom Products installation, if you consider their many practical benefts, as well as the fact that they cost marginally more than a plain towel rail, whether or not to A green fnishing touch include one into your bathroom is really a no brainer. They really Heated towel rails have become an essential addition provide an easy and inexpensive to any modern bathroom. They ofer a number of eco- means of adding the fnishing friendly benefts, and really complete the bathroom space touch and that extra bit of as a luxurious in-home retreat. luxury to any bathroom space.” Less water per fush Paints that don’t peel walls In the 1980s, Duravit had already reduced Eco-friendly paints are simply non-toxic the amount of water consumed by its paints that do not contain any chemical toilets to six litres as opposed to the nine and are created from completely natural or more litres that were standard at the ingredients. That noxious smell after time. Thanks to ongoing research and painting comes from volatile organic development, Duravit is today able to compounds, or VOCs, which the paint can ofer toilets that fush hygienically using continue to emit for months. Some of these just 4.5 litres or even less water. With Dual- chemicals, like formaldehyde and benzene, Flush technology, a household of four can have been linked to respiratory problems save about 17,000 litres of water per year. and even cancer, and others damage the Pressing the economy button fushes ozone layer. Low-VOC paint types include: with just half the water volume, whereas Latex, acrylic and milk paint. The labels of pressing the large button uses the full paint containers can be checked for the Smart showers water volume. following information: To be considered Low-VOC, the paint should consist of <50 grams per litre (g/l) of VOC. To be Hansgrohe showers have been using considered Zero-VOC, the paint should EcoSmart technology for a long while, consist of <5 g/l of VOC. Solid content and with every new shower brought usually ranges from 25-45%, higher solid into the market, Hansgrohe continues percentages ensures less VOCs. to factor in the precious resource that water is. With AirPower technology, luxurious air molecules are injected into the water, giving it volume, but using up to 50% less water than conventional showers whilst maintaining the feeling of being under a rain shower. The latest shower range, Raindance Select, boasts EcoSmart technology and the new click Green wood is good system by using a button to change In an afrmative step towards meeting the needs of more discerning purchasers of treated between various spray modes. EcoSmart wood, Lonza Wood Protection has received the Ecospecifer Global endorsement for two of showers are limited to 9 liters per minute. its products, namely Tanalised™ E and Vacsol™ Azure preservative treated wood. This sets Thermostatic mixers are also EcoSmart in the foundation for Lonza to meet the noticeable shift towards an emerging awareness by their own right. There is a temperature industry professionals and the end–user for alternative contemporary products that bear the limit of 40 degrees, which means use of environmental Green Star rating standards. “Right now the end-user is looking for treated less energy used by accidental heating. wood solutions that will assist in good green design practice and meet growing public and Also, by setting the temperature of water, private demand. As an industry we need to encourage professionals to use more timber, this means less time and water spent which reduces the carbon footprint of buildings, increases thermal efciency, ofers great fnding the best temperature for your aesthetics and structural strength and is sustainable and renewable,” said Gerard Busse, shower. Marketing Manager, Lonza Wood Protection. 36 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

RESIDENTIAL Aluminium, keeping you warm Aluminium is the most recyclable metal available today. Approximately 75% of all the aluminium ever produced is still in productive use, having gone through countless loops of its lifecycle. The recycling process of this remarkable resource requires less energy than when using virgin material. Unlike other materials, aluminium does not rust or degrade and through its lifecycle does not need to be constantly maintained to ensure its durability. Wispeco Aluminium aspires to “Go Green” as it takes up its responsibility to set an example as leading aluminium extruder in South Africa. Wispeco has designed and developed a range of thermally efcient windows and doors, suitable for single and double-glazing. As a result of its thermally efcient properties, the product keeps warmth in during winter and coolness in during summer, reducing the use of air conditioning and heating systems – and thus saving energy. LED, it’s all in the lighting Cree® is leading the global LED lighting revolution and is making energy-wasting traditional lighting technologies obsolete through the use of energy-efcient, mercury-free LED lighting. Cree®, a US$1.5 billion company, is the market-leading innovator of lighting-class LEDs and LED light fxtures. Cree’s lighting product families include indoor and outdoor LED fxtures and bulbs which are driving improvements in applications such as general illumination, roadways and highways, parking spaces and garages, petrol stations, signage and retail stores. “The CR series is truly a no-compromise alternative when upgrading from fuorescent lighting,” said Russ Gittleson, CEO of Light Kinetics. “Delivering higher- quality light, longer life, lower glare and greater energy savings than any comparable fuorescent options, the Cree® CR series trofers are a natural ft for ofce settings.” Backed by a Cree® original 10 year warranty on the CR22 LED fxtures, the risk of investing in this new technology is fully mitigated. Bamboo is the new green Clean with green As an alternative to hard wood trees, bamboo Eco-friendly cleaning products in South is extremely eco-friendly. In cutting down Africa are cleaning products that do not trees, the deforestation of rainforests and harm the environment, whether in their lands across the world has created several production, use or disposal. Some South problems that will take decades to reverse. African “going green” eco-friendly cleaning With the growing trends in environment products when in use, help conserve energy, awareness, bamboo has cropped up as a green minimise carbon footprint or the emission alternative to other woody raw materials. Forget granite, think eco of greenhouse gases, and do not lead From soft bath towels, to sturdy buildings to substantial toxicity or pollution to the and homes, bamboo is used for products in environment. Other eco-friendly cleaning nearly every industry. Most bamboo fences, ECO by Cosentino is a new, eco-friendly decor products in South Africa are biodegradable, tables, and chairs are made in sustainable and construction product that is created from recyclable or compostable. Hence, they do and eco-friendly ways. If you are looking for 75% recycled materials. It is aesthetically not harm the environment or upset the sturdy bamboo furniture or bamboo fooring, beautiful and is available in 10 designer ecological balance when they are disposed just do your best to fnd a brand that uses colours. It has a variety of decorative and of. There are also eco-friendly products in as little formaldehyde as possible. Consider construction project uses, including bathroom South Africa that are made out of recycled manufacturers that use urea-formaldehyde surfaces and kitchen countertops. It could materials. Look for manufacturers that list glue. It doesn’t emit any toxins once it is dry. be considered the eco-friendly alternative to their ingredients either on the label or on Bamboo is naturally resistant to rot, termites, granite. This state-of-the-art product is created their websites. and other pests, making it an excellent choice using processes that comply with the highest for sturdy buildings and outdoor décor. The of environmental standards, making it highly plants produce a great deal of oxygen, and sustainable. Reusing post-consumer and can process large quantities of carbon dioxide post-industrial materials at the end of their life emissions. Since it grows in diverse climates, cycle helps to conserve the planet’s natural it can be planted in strategic areas to control resources. Durable yet malleable, the recycled emissions and reduce carbon dioxide gas elements of ECO are bound together using an from other sources. environmentally-friendly resin derived in part from corn oil. www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 37

03 FROM AN OFFICE AT DUBE CITY TO MINUTES KING SHAKA INTERNATIONAL AIRPORT 120 000SQM 300SEATER OF BULK TO DEVELOP FULLY EQUIPPED CONFERENCE CENTRE 60 MASTER 30 & RESTAURANT YEARPLAN HOTEL MINUTES ZONED FOR FROM DURBAN 3 COMING SOON CBD BUSINESS 10BLOCKS RETAIL AND HOSPITALITY TO DEVELOP 1 GOAL TO MOVE YOUR BUSINESS FORWARD Dube City is the next generation retail, hospitality and business precinct – a purpose-planned airport city close to King Shaka International. And a city built to connect you to the world … and move your business forward. CUBE/36900 www.dubetradeport.co.za www.reimag.co.za 36900_03_ad_rei_mag.indd 1 2013/08/19 12:35 PM

REI Commercial New Act Passed Into Law New Capital Structure Carbon Tax A Negative? Introduced The Spatial Planning and Land Use Growthpoint Properties Limited has become Te SA Chamber of Commerce and Industry Management Act seeks to bridge the racial the frst SA REIT to introduce a new capital (Sacci) claims it is concerned about the possible divide in spatial terms and to transform the structure, converting from complex linked units ‘malign economic impact’ of the proposed settlement patterns of the country in a manner to the straightforward ordinary share structure. carbon tax. It added the effect of such a tax that gives effect to the key constitutional Friday, 2 August, was the first day for on the economy would be ‘significant’ and provisions. It will address the legacy of the Growthpoint’s investors to deal in the new might have ‘severe efects’ on job creation and discriminatory, inefficient and costly special ordinary shares on the JSE. Norbert Sasse, SA’s international competitiveness. Sacci had pattern which puts a considerable burden on CEO of Growthpoint Properties Limited submitted commentary to the Treasury on the the public resources. Te Act will also ensure says: “Growthpoint’s new capital structure is policy paper. Tis concerns the introduction of a that the restructuring of the South African cleaner and simpler. It has been welcomed by carbon tax of R120 a metric tonne on emissions cities, towns and settlements is in line with our investors. Taking this exciting path was a of carbon dioxide from 2015 onwards. The the priorities and principles of the democratic natural step for us in becoming a full REIT. chamber said there was little detail on policy government. Land Affairs Minister Gugile Growthpoint’s change to ordinary shares options such as tax credits for companies that Nkwinti said the legislation would ensure represents the international best practice for a invested in energy-efficient machinery, and the system of spatial planning and land use REIT and, for that matter, any publicly traded ‘deep concern’ that the tax would not reward management promoted social and economic investment.” Growthpoint’s REIT status was carbon mitigation. integration and inclusion. granted by the JSE and it began trading as a REIT on the JSE with efect from 1 July 2013. Valuable Input Ken Reynolds, Amanda Stops, CEO, Charles Vining, MD, Shiraaz Hassan, Stefano Contardo, Regional Executive, South African Coucil of Seef Sandton Director, Asrin Development Nedbank, Shopping Centres Property Developers Executive, Improvon “Te property market “Te research shows the “New commercial While the majority “We believe all property usually lags the business average shopper visits development in Sandton tend to focus on the developers have a moral cycle by up to 24 months malls 38 times a year will see thousands of negatives in South obligation to ensure so the property sector and spends 80 minutes employees relocated Africa, our European that their developments will probably remain on average per trip. to ofces in the counterparts have to have less dependence relatively fat in the near Increasingly, when we Sandton CBD. All face far bigger woes and on our planet’s natural term.” go shopping we take our this development will appear to be managing resources than they have online lives with us too.” inevitably create a big these challenges. South in the past. Going green demand for residency.” Africans, too, need to should be a necessity for focus on fxing our future.” all property developers.” www.reimag.co.za September 2013 SA Real Estate Investor 39

STRATEGIES BY KEN GAFNER Gas-Powered Generation Te future of energy is here ower in South Africa is predominantly generated in large coal - burning power Pstations. Each kilowatt-hour of electricity consumes 1.42 litres of water, produces 161g of ash and puts enough CO2 into the atmosphere to fll a 1kg CO2 fre extinguisher. Tis makes South Africa one of the major contributors to CO2 emissions worldwide with emissions from power generation exceeding all European countries except Germany. Electricity in South Africa is no longer cheap. Energy efciency interventions and fuel switch projects, which were previously not fnancially viable, have become increasingly attractive. Buildings and industrial processes in South Africa typically have very poor energy efciency with substantial corrective action required to bring these in line with current South African and international standards. Gas-powered generation with efective use of CHP has the potential to improve energy the waste heat has not achieved its potential efficiency and reduce emissions in South The potential for green energy to in South Africa. This technology is known Africa. It is estimated that, by 2030, CHP reduce emissions as Combined Heat and Power (CHP) and could contribute 17% of total electricity Green energy has moved from the lunatic provides exciting opportunities for industrial generated in South Africa which would have a fringe to mainstream for all the right economic plants and buildings with access to a gas signifcant mitigating efect on South Africa’s and sustainability reasons. An industry has supply. Power is generated onsite using gas CO2 emissions. developed around energy optimisation with engines or micro-turbines with engine waste the beneft of proper support from Government heat captured for heating and cooling. In ideal The pricing uncertainty and limited through Eskom subsidies and incentives. Solar cases over 80% of the input energy is used availability of gas have increased project risk photovoltaic projects, again with the support of compared to 30% for conventional coal-fred and resulted in many projects being deferred or incentives, are being deployed at an impressive generation. Tis solution is cost efective and shelved. Te new NERSA regulations, coming rate. reduces emissions by over 50%. into efect in 2014, cap the maximum selling price of gas with future increases coupled to the Natural gas is a clean fuel with low CHP is a well-entrenched technology in cost of the basket of energy sources in South emissions relative to the South African Europe, where 11% of power (2008 fgures) is Africa. Tis creates predictability in gas pricing grid electricity, coal or liquid fuel. Te most generated by CHP with several countries over and allows sufficient margin for other gas effective application of gas is in displacing 30%. Tis is largely due to well-developed gas suppliers to enter the market when it is opened these energy sources for heating applications. distribution infrastructure and realistic pricing in 2014. In these applications virtually all the energy of gas relative to electricity. in the gas is efectively used, providing clear All natural gas in South Africa is currently cut cost benefts. Buildings such as hospitals, Te gas distribution network in South Africa delivered via the Sasol pipeline from central residences and hotels, with a substantial and is limited to Johannesburg and a corridor along Mozambique which does not have sufficient relatively constant hot water or steam demand, the route of the Sasol pipelines. Tis, coupled capacity or reserves to support large scale CHP are ideal for conversion to gas-powered with low electricity tarifs has, until recently, take-up in South Africa. Developments which heating. inhibited the uptake of own generation. could positively influence gas availability in 40 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

COMMERCIAL South Africa include significant gas finds buildings were retained and an additional 6MW Monitoring and optimisation is undertaken by in Mozambique, the shale gas potential of of emergency diesel generators were installed Single Destination Engineering. South Africa and the regional availability of to supplement the gas generators under power liquefed natural gas (LNG). In particular, the failure conditions. Tis provides an exceptional Te Energy Centre is supplied with natural regional availability of LNG offers exciting level of security of supply with the Campus gas from the Egoli Gas piped distribution opportunities for the creation of gas supply able to be supported by the utility supply, gas- network in central Johannesburg. The gas nodes in all of the South African coastal powered generation or local diesel generation. supply capacity is adequate for expansion up metros. An adequate supply of natural gas could to 15MW of generation. Egoli Gas supplies be made available to realise the CHP potential Te Energy project required the Campus to Johannesburg from three intake points of the of South Africa. be ring-fenced outside the City Power network Sasol Gas network. Te Absa Energy project with a new utility supply point and internal necessitated linking the three networks and A positive driver for CHP development distribution. An intake substation was built to upgrading the overall gas distribution network in South Africa is the Absa Energy project provide a new centralised intake point. New in central Johannesburg. in central Johannesburg which is the only internal MV distribution at basement level Campus heating and cooling commercial scale CHP project supporting links all buildings. an ofce campus. Te other CHP and trigen Typically one third of the input energy to a gas projects in South Africa are small scale and The sleeve network linking the basements engine is converted into electrical power with support only a relatively small part of the site provides routes between buildings for MV the remainder dissipated via the exhaust and load. Te Absa project provides an example of electrical distribution, low temperature engine cooling system and radiated into the the proper implementation of the technology, hot water distribution and chilled water plant room. Te majority of this heat is easily lowering the risk for projects to follow. distribution. Approximately 100 sleeves captured for heating and cooling applications. ranging from 200mm to 700mm diameter Tis allows the exceptional energy efciencies The Absa energy project were drilled between the basements of all the achievable with CHP projects. The Absa Campus in central Johannesburg Campus buildings. comprises seven buildings, providing 140 000m2 Waste heat from the gas engines is captured of ofces and data space, with a combined load The gas engines operate from 06h00 to and distributed to the Campus as low of 14MVA. The Campus is supported by an 20h00 weekdays and Saturdays under the temperature hot water (LTHW). Te LTHW Energy Centre which operates in parallel with control of two operator shifts. The Campus displaces electric building and domestic the incoming City Power utility supply. The load as seen by the utility is controlled at the hot water heating. This free energy displaces Absa Energy project commenced operation in night time load demand by varying the level electrical consumption reducing the building May 2010. of own generation. This provides a flat load and Campus load. The Absa Towers West profile resulting in low maximum demand buildings use waste heat for building heating The Energy Centre is equipped with 4 charges. Te load profle is regularly monitored and domestic hot water. During the last winter Jenbacher gas engines each of 3MW nominal and optimised to minimise operating costs. season, the buildings achieved an impressive rating. As added security the diesel powered Diesel Electric Services are responsible for maximum demand reduction of 30% and a emergency generators in each of the Campus the operation of the Energy Centre for Absa. 25% reduction in electricity consumption. Te www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 41

STRATEGIES majority of the Campus buildings pre-date Africa electricity grid is under stress. Absa which, together with increasing gas supply the Energy Centre and are not readily able has been contracted under this programme competition following opening of the market, to utilise LTHW for heating. The LTHW since October 2012. Te daily dispatch for is likely to lead to further improvements in the system will be expanded as Campus buildings typically four hours on weekday evenings fnancial viability of projects. are refurbished. displaces the risk of load shedding for approximately 3000 houses. The system is Te Carbon Tax will be introduced in 2015. Te waste heat can also be utilised to drive functioning smoothly with benefts for Absa, Tis will provide a tangible fnancial beneft absorption chillers to generate chilled water Eskom and South Africa. from the reduced Campus emissions due to the and provide building cooling. Te economics Energy Centre. “Carbon Tax will be introduced of providing cooling from waste heat are improving but have not yet reached the point in 2015. This will provide a As Campus buildings become due for of being an attractive business case. The refurbishment there will be the opportunity to tangible fnancial beneft” Energy Centre has the potential to displace make optimal use of the Energy Centre waste the cooling load of the three largest buildings heat for building heating, domestic hot water on the Campus. and cooling. Tis will result in a corresponding Te Energy Centre is operating reliably and reduction in CO2 emissions and Campus The frst three years is transparent to the staf on the Campus. Te electrical power consumption. The financial benefits of the Energy Centre financial and resilience benefits are quietly have improved steadily over the frst three years present in the background. Te Energy Centre has achieved its targeted of operation. Tis has been achieved through benefits over the first three years. The next The future constant monitoring and regular optimisation. twenty years are exciting with the building A comprehensive monthly report is produced by Te Energy Centre has a remaining useful life refurbishment programme providing the SDE which provides Absa with the information of at least another 20 years. Over this time it opportunities for on going improvements required for group- wide energy reporting. will continue to be a valuable asset. to the Campus energy efciency and carbon The Eskom Emergency Generation footprint . Programme allows Eskom to dispatch private The new NERSA pricing regulations RESOURCES generation during times when the South provide a new level of certainty in gas pricing Single Destination Engineering Single Destination Engineering Specialists in Data Centre and Energy Solutions Our core expertise includes:  Energy centres and emergency power generation  Combined heat and power solutions  Alternative energy systems  Energy efficiency solutions  Data centres and high resilience installations  Risk and single point of failure analysis  Planning of works in a live critical environment Tel: +27 11 997 2340 Email: [email protected] Web: www.sde.co.za www.reimag.co.za

IMPROVING BY CATHERINE PATE Fast Facts Te benefts behind your green building lobally, the built environment is responsible for one third of all green Increased productivity house gas emissions/carbon emissions and energy efficiency and Improved internal environment quality (IEQ) from increased Gintroducing more renewable sources of energy is a current priority for ventilation, temperature and lighting control, the use of natural South Africa as it faces a medium-term national power supply shortage and steeply light and the absence of toxic materials result in the improved rising electricity tarifs. health, comfort and wellbeing of building occupants. This has been shown to increase productivity – always a signifcant factor Green building presents the simplest, most-immediate and single largest in the proftability of a business. Studies show improvements in opportunity for greenhouse gas abatement, outstripping energy, transport productivity of up to 20% which easily covers any premium paid and the industrial sectors combined. The movement is an opportunity to use for higher quality green space. resources efciently and address climate change while creating healthier and more productive environments for people to work and live in. Attracting and retaining talent Skilled staff members are hard to attract and retain. However, educated people, particularly Lower operating costs Reduced liability and risk younger graduates, are increasingly aware Research reveals that Green Star SA buildings Green buildings are future-proofed against of sustainability and wellness issues and enjoy energy savings of between 25% and 50% increases in utility costs, potential energy and consequently, may be more attracted to working compared to buildings designed to SANS 204 water supply problems, tightening legislation, in a green environment. standards. The payback periods of energy and carbon taxes and the impact of mandatory water saving practices are becoming much energy efficiency disclosure, as well as costly Minimising churn shorter as a result of increasing utility costs and retrofts or even obsolescence. With increased comfort and occupant the wider availability of more afordable green Sustainability risk factors can signifcantly afect satisfaction and more flexible spaces, green building technology. the rental income and the future value of real building can minimise the costs and impact of estate assets, in turn affecting their return on investment. churn. With lease terms in South Africa typically ranging between 3 and 5 years, churn represents Higher returns on assets a signifcant cost to businesses. Extensive studies in the United States and Retaining government and other major tenants Australia have shown rental rates in green The Department of Public Works’ planned ‘Green Combat climate change buildings to be approximately 6% and 5% higher, Building Framework’ is likely to include certain Green building practices can have a signifcant respectively. green building requirements for government impact on combating climate change and help accommodation. This will increasingly apply to to create truly sustainable communities. large multi-national tenants too. Increased property values In practice green building measures include: Decreased operating costs, lease premiums and Responsible investing • Careful building design to reduce heat loads, more competitive, less risky, future-proofed Investment in green building is an integral part maximising natural light and promoting the buildings contribute to the value of green of the worldwide trend to more responsible, circulation of fresh air. buildings. This has been empirically proven in sustainable and ethical investing. • Energy-efcient air conditioning and lighting. the United States and Australia with 11% and 12% As investors and occupiers become more • Using environmentally friendly, non-toxic valuation premiums, respectively. materials. knowledgeable about and concerned with the environmental and social impacts of the built • Reducing waste and using recycled materials. Enhanced marketability environment, buildings with better sustainability • Water-efficient plumbing fittings and water Green building creates a diferentiated product credentials will have increased marketability. harvesting. in the market, which is viewed as technologically Additionally, there is a demonstrated link between • Using renewable energy sources. advanced and environmentally and socially the green characteristics of buildings and the • Sensitivity to the impact of the development responsible. These attributes are positively ability of these buildings, in some markets, to on the environment. linked to the company brand and image of the more easily attract tenants and to command owner and/or the tenant. higher rents and sale prices. RESOURCES GBCSA www.reimag.co.za September 2013 SA Real Estate Investor 43

GETTING STARTED BY JAMES COLBY Sustainable Buildings Investing in the future ccording to Stefano Contardo, and the suppliers you work with are all crucial pleased that everything we’ve done at Standard Development Executive at Improvon, elements in ensuring that an industrial or Bank Rosebank contributes to the creation of Ait makes sense from both an ethical commercial space is ultimately ‘green’.” a sustainable environment, both internally and and economic point of view to implement as externally, for staf, as well as for visitors and many green technologies as possible whether One building which has met the green for the public use park area.” it is a building which is being retroftted or a standards and then some is the new Standard Water new development. Bank building situated in Rosebank, Gauteng. The new 65 000m² building, currently Water will be conserved inside the building “In a new building the overall project design referred to as Standard Bank Rosebank, has through water-efcient fttings such as dual is imperative. Te way a building is orientated been awarded a fve-star design rating by the flush toilets, low flow showerheads and tap is critical to ensure that it gets maximum light, Green Building Council of South Africa. aerators. For external use, water infltrating but obviously not direct light, as you want to Says Mr Stewart Shaw-Taylor, Head CIB the basement as a consequence of high avoid heat build up inside the building. Te Real Estate, Standard Bank. “Sustainability ground water levels will be captured and way you choose to build, the materials you use is a holistic approach, so, we are particularly used for irrigation of the gardens. This will 44 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

GETTING STARTED be supplemented by rainwater harvested from will add value to your building, one such is and sustainability requirements. The the roofs. Te rainwater harvesting alone will clay bricks. Clay bricks provide sustainability equipment has low-energy features, lowering reduce potable water demand by 56%. consequent to their longevity, proven power consumption. The building has the durability and structural integrity beyond ability to manage lift and escalator trips to The building contains 50% evaporative 100 years. Tis mitigates future carbon debt ensure passengers move through the building cooling systems and 50% air-cooled chiller associated with replacement and maintenance in the most efcient manner. systems. While evaporative cooling systems of less durable walling materials. Clay bricks Interior design are energy efficient, they use a substantial contain natural mineral properties recognized amount of water. This consumption will be for meeting all necessary requirements for Materials such as granite, marble, stone and monitored. healthy living, their inert qualities assure no natural timber speak of quality, permanence release of toxic fumes or VOC’s to impinge and integrity. Tey will wear gracefully and Energy on air quality and the mass enhanced R-value remain timeless. The sustainably-sourced An existing Egoli Gas main gas line runs past they provide to SANS 204 compliant brick timber has been selected for its pronounced the property. The building therefore makes walls assures superior thermal comfort and grain and honeyed warmth, tactile to touch use of a gas powered tri-generation plant. Tri- the lowest heating and cooling energy usage and natural in feel. generation is the simultaneous production of in South Africa’s major climatic zones. Clay electrical energy and heat and cooling from a bricks’ comparably low lifecycle cost further “It’s an unavoidable fact that any development single energy source such as natural gas. Tri- defnes clay brick as peerless for sustainable will have an impact on the environment,” generation is commonly referred to as CCHP house construction in South Africa. admits Contardo. “However, we believe it is (combined cooling, heating, and power our responsibility to mitigate these impacts as Facade generation). far as possible and reduce the carbon footprint Te glass curtain wall system covers more than of each development as much as we can.” Further energy savings will be achieved 65% percent of the vertical external surfaces through efcient lighting. Te lighting power of the building. It extends for 12 500m² In addition to the obvious corporate social density has been reduced to below 2.5W/m² - equivalent to 50 tennis courts. It is triple- responsibility benefits, there are financial per 100 Lux. A digitally addressable lighting glazed with built-in remotely-activated benefits to greening an industrial space, he system (DALI) has been installed for 99.26% shading blinds. The blinds can be retracted reveals. “From a fnancial point of view there of the usable area. This allows individual into the framing system to enable maximum is no doubt that you do cut down on costs light fttings to be programmed according to natural light on cloudy days. and you will save money in the long term. need, and facilitates automatic dimming and However, more than that, we believe all Electrical switching of lighting based on occupancy and property developers have a moral obligation daylight availability in the space. Lighting and Te building’s Digital Addressable Lighting to ensure that their developments have less light power will be individually monitored per Interface (DALI) system, which connects dependence on our planet’s natural resources floor and energy uses greater than 100KVA the 4 ,500 luminaires in the ofce areas to a than they have had in the past.” will be separately metered. No light beam on computer, enables lighting to be re-confgured the piazza or in the garden is directed into without re-wiring fittings. Different lights Going green should be a necessity for all the night sky, so external light pollution is can be programmed to respond to different property developers, argues Contardo. “We’re minimised. situations without afecting the surrounding frmly of the opinion that the more you can, lights. The energy usage of individual light the more you should. Irrespective of the type Materials fittings can be monitored and Maintenance of development, we make every efort to ensure Over 60% of the building’s steel has more can be alerted when a lamp or ballast fails, a pleasant working environment which has as than 90% post-consumer recycled content, saving maintenance time. Five Dynamic UPS many green elements included as possible.” massively reducing the embodied energy. Fifty generators, each producing 1.65MW, provide percent of all the timber has been sourced the building with full “No-Break” back-up Improvon and Standard Bank are two of from Forest Stewardship Council-certified power. the many companies in South Africa that suppliers. are becoming increasingly green and looking Air-conditioning A minimum of 20% of the bulky materials to incorporate functional and attractive permanently installed in the building will The system uses mix air cooled chillers (to buildings with sustainability and eco- be procured from within 400km of the reduce dependency on water) and water-cooled savings. Te buildings of today have to take construction site, reducing carbon emissions chillers (for their higher energy efficiency). into account the problems of tomorrow and that would otherwise result from the Fresh air is preconditioned using indirect one of the biggest problems facing the world transportation of materials. evaporative cooling in summer and reverse is sustainability, and all it takes is one small cycle heating in winter. green step in the right direction. When you are developing buildings it’s very RESOURCES Lifts and escalators important what type of materials you use. Improvon Tere are a number of green materials which All lifts and escalators meet environmental STD Bank 46 September 2013 SA Real Estate Investor www.reimag.co.za

www.reimag.co.za

LEGAL MOVES BY PATRICK FORBES Environmental Indemnification Look a little closer at the laws ver the past 15 years since the promulgation of the National OEnvironmental Management Act (NEMA), there has been an array of further environmental litigation that has entered our legal landscape. Tis raft of laws has however created a highly regulated environment within which to operate, and business has accordingly sought to identify the risks associated with falling foul of such legislation and to identify the necessary means to avoid those risks where possible. The reaction from the market place to the onslaught of “green law” has been varied, depending largely on the sector in which a particular business operates, but there has certainly been a clear acceptance by business of the legislation that has been passed to regulate and control our interaction with the natural environment around us. Part of this acceptance by business is evident from property agreements relating to purchase and sale transactions, leases and mortgage bonds amongst others, in which there is a proposed contaminated proliferation environmental indemnification certain shortcomings in the land provisions will operate. clauses in one form or another. Tese clauses legislation and it is therefore vital to Te provisions allow for the Minister are drafted, depending on the nature of the ensure that indemnifications serve or the MEC to identify contaminated agreement, with a view to minimising the their purpose for the party seeking to be land by way of a notice to be published risk to one or other party entering into the indemnifed. in the government gazette, or a notice to a agreement, for environmental damage and the particular person, to identify what is termed costs that may be associated with remedying Sections 35 - 41 of NEMWA, the remediation an “investigation area”. Once the investigation any such damage. But how efective are these or contaminated land provisions, although area is established, the Minister or MEC may indemnifcations, and do they adequately cover not yet in force, are set to become efective then cause a site investigation to take place the parties for the risk posed? at some later date. Tese provisions in their by directing either the owner of the property current wording will allow for them to be within which the investigation area is located, Part of this raft of green legislation is the applied retrospectively, in other words, or the person conducting the activity that has National Environmental Management Waste applicable to circumstances that may have caused or may have caused the contamination, to Act (NEMWA), which deals with, amongst a taken place prior to the law actually coming conduct a site assessment. Once a site assessment number of other aspects, the classifcation, the into efect. Tis is unusual in a legal context, report has been completed considered, there disposal, the recycling and the treatment of but it means that one is forced to take are four options available to the Minister or waste. When NEMWA was brought into force cognisance now of what is intended as the MEC, in respect of the investigation area, there were, however, certain provisions that provisions may have an impact upon actions were not brought into operation at the time the taken both now and in the past. 1) to declare it a risk that warrants immediate act was promulgated and will only to be in force In order to understand the nature of how an remediation, at some unknown later date. Nonetheless, indemnity will or will not provide the protection 2) to declare it a risk that requires remediation consideration of these provisions may reveal sought, one needs first to examine how the over a specifed period, 48 September 2013 SA Real Estate Investor www.reimag.co.za