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LEGAL MOVES 3) to recognise the risk and implement monitoring looking to a person, and this includes juristic whatsoever. Section 38 (4) specifically states and management measures to manage the risk, persons, who will be in a position to undertake that a remediation order “must be complied and lastly, a site assessment or appoint the necessary with at the cost of the person against whom 4) to make a finding that the land is not professionals to conduct it and to be in a position the order or directive is issued”. Tere can be contaminated. to efect the necessary remediation should same no confusion in terms of the interpretation of be required. It goes without saying that the section 38 (4) or what the legislature intended. If remediation is required the Minister or MEC remediation of land, depending on the scale Te person/s set out in the remediation order can then make what NEMWA refers to as a thereof, could be a costly and time-consuming must at their own cost give efect to the order. remediation order which, to the extent that it endeavour and as such the Minister or MEC is applicable, must identify the person to whom will be looking to the person, whether that be Yes, you may be in a position, once the the remediation order relates, the land, the the owner, the tenant, or the party undertaking remediation has been effected, to institute measures that have to be taken to remediate the the activity causing the contamination, who action to recover the loss sustained, and this land and the period with which the remediation would be in fnancial position to do so. action may be based on an indemnification must take place. clause, but this further action will of course “Consider environmental incur further costs and time, whilst in the indemnifcations more closely and What is evident from the above is that the meantime the costs incurred due to the discretion in terms of who receives the notice remediation will have to be borne by you. identifying an investigation area, and who is ensure they minimise the risks” then directed to remediate the contaminated With this in mind, it may be time to consider land, lies wholly with the Minister or the Given the above, will the environmental those environmental indemnifcations a little MEC. This discretion when exercised could indemnification clause contained in the more closely and ensure that they minimise have enormous cost implications for the party lease, the purchase and sale agreement or the the risks to the greatest extent possible. The who the Minister or MEC has in his sights as mortgage bond serve to assist the party seeking Minister or MEC may, however, be the one the one to remediate the land in question. indemnifcation? Given the discretion is with having the last laugh. the Minster or MEC to choose the person to RESOURCES The purpose of these provisions, which is to whom the site assessment and remediation plan Garlicke & Bousfeld provide for the remediation of contaminated will apply, the indemnifcation, depending on land, means that the Minister or MEC will be its particular wording, may be of no assistance 50 September 2013 SA Real Estate Investor www.reimag.co.za
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LISTED BY IAN ANDERSON Reading Listed Results Become fuent in fnance jargon or many investors, interpreting a Te company will also incur administrative items) to distributable income. company’s financial accounts can be a expenses, like staf salaries and the expenses The balance sheet is also fairly simple to Fdaunting challenge. In the listed property associated with being a listed entity. Those understand, dominated on the assets side sector, the task appears no less daunting, given companies with internalised management by the property portfolio and investments the number of accounting standards that create structures can control for increases in in other listed property companies, funded a great deal of noise, but shed little light on the administrative expenses, while external through a combination of equity and debt fnancial well-being of the company. In reality, management arrangements are based on a set capital. Occasionally, there will be slightly the analysis of a listed property company’s percentage of company enterprise value (the more confusing balance sheet entries, usually fnancials is actually quite simple because the value of the company’s issued share capital on as a result of Black Economic Empowerment business model is easy to understand. the JSE Limited plus the value of the company’s (BEE) transactions entered into and where debt) and are infuenced by changes in the share loans or fnancial assistance has been provided Listed property companies all own, buy, sell, price and the issued share capital. to the BEE partners. The deferred tax develop and redevelop properties (the assets). liabilities raised on the sale of properties will Some companies will have investments in other The final significant line in the income be removed from balance sheets due to the listed property companies, which would also statement of most listed property companies introduction of Real Estate Investment Trust form part of the asset base. Te assets are the is net finance costs – the difference between (REIT) legislation which exempts REITs source of all revenue, either in the form of rental interest earned on cash holdings and the interest from capital gains tax. All South Africa’s income, the recovery of operating expenses paid on borrowings. Te typical listed property property loan stock companies are expected to from tenants or from distributions if they have company in South Africa has borrowings equal apply for and be granted REIT status by the investments in other listed property companies. to 30% of the value of the assets, typically JSE Limited. referred to as gearing or the loan-to-value ratio. Listed property companies will incur expenses Apart from fnancial metrics, listed property relating to the production of revenue, including Most income statements will have an companies will also disclose property maintenance of the properties, commissions element of noise that does not impact on portfolio metrics, which may include a lease paid to brokers, municipal rates and utilities the distributions payable or the cash flows expiry profle, average rentals per property (some of which will be recovered from tenants). produced by the company. These typically type, geographic spread, average cost per Tese expenses are lumped together on a single include an adjustment for straight-lining square metre by property type, as well as an line in the income statement as in-depth analysis of leasing activity TYPICAL INCOME STATEMENT (EXCLUDING NOISE) operating expenses. The ratio of in the period under review. Revenue - contractual rental xxx xxx operating expenses to revenue will - tenant recoveries xxx xxx vary from company to company Over the past decade, disclosure Less: Operating expenses (xxx xxx) and is dependent on factors such by South Africa’s listed property Add: Distributable income from listed property investments xxx xxx as the mix of properties within the companies has improved dramatically Less: Administrative expenses (xxx xxx) portfolio. Te diference between Less: Net fnance income (excluding linked debenture interest) (xxx xxx) and our companies rank among the revenue and operating expenses is Distributable income xxx xxx world’s best in terms of transparency. referred to as net operating income This makes the job of forecasting (NOI) and refects the performance of future distribution growth far simpler the property portfolio. Te level of NOI growth, rental revenue and fair value adjustments on and is one of the reasons why analysts covering after adjusting for property acquisitions and the property portfolio, as well as on derivative the listed property sector are never far of the dispositions, gives analysts a clear indication of instruments used to hedge out interest rate risk. mark with their forecasts. the quality of the property portfolio, as well as Most companies will provide a reconciliation RESOURCES the efectiveness of company management. of accounting profts (including the non-cash Grindrod Asset Management 52 September 2013 SA Real Estate Investor www.reimag.co.za
CAPITAL PRESERVATION AT ITS CORE Prescient Investment Management is a leading quantitative asset manager, headquartered in Cape Town with additional offces in Dublin, Windhoek, Johannesburg, Pretoria, Durban and Stellenbosch. Prescient also has a representative offce in Shanghai and we were the frst asset manager in Africa to be awarded a QFII (Qualifed Foreign Institutional Investor) licence to invest directly into China. Founded in old stables, Prescient has evolved into a global player. It has been 15 years since we opened our doors for business, offering to the market our unique quantitative approach to asset management. With capital preservation at the core, Prescient’s investment philosophy is simple: PEACE OF MIND. At Prescient Investment Management we aim to give our clients a level of certainty around their investment outcomes, with a commitment to achieve no less than the agreed risk benchmark, and RANGE OF thereafter to look for opportunities to add value over and above this benchmark. We do not merely INVESTMENT diversify risk: risk is measured and managed holistically using proven quantitative techniques. PRODUCTS Our systematic approach to managing risk is scalable and enables us to replicate our investment Unit trUsts process across all markets. When it comes to implementing our process, we adopt a team-based Local Funds approach and consistently work together in a streamlined manner. Each of us understands our Offshore Funds clients’ risk tolerances and this knowledge helps us to meet their expectations of not losing capital. retirement solUtions Living Annuities Prescient aims to deliver only the highest quality of service, and hence we do not outsource our portfolio administration. Retaining our own administration provides us with full control of our Retirement Annuities service delivery and allows us to monitor service quality across all areas of business, thus remaining Preservation Funds fully accountable to our clients. Umbrella Funds Prescient Investment Management has been named Absolute Returns Manager of the Year at Private the 2013 Imbasa Yegolide Awards for Professional Excellence, hosted by the Principal Offcers WealtH manaGement Association (POA) to acknowledge outstanding service delivery and leadership in the industry. Email: Prescient previously won the Overall Investment Manager of the Year Award at the 2011 Imbasa [email protected] Yegolide Awards. The animal sculptures were created by visionary South African artist, Beth Armstrong. Never deviating from formation, geese always stick to their fight path. That way, they manage to migrate successfully year after year. Prescient doesn’t zig or zag either. When it comes to investing, we consistently work together, allowing our clients’ investments to grow successfully. Like geese, we also adhere to a team-based approach, working together to reach new heights in the most effcient streamlined way. www.reimag.co.za Prescient Real Est Investor Ad.indd 1 7/17/13 3:35:17 PM
SMART MOVES BYJAMES COLBY Invest In Power New energy solutions in business ountries like the USA are leading the 40 000MW of new generating capacity. momentum, as South Africa’s energy needs way when it comes to corporate retailers Eskom has repeatedly stated that it cannot become more pressing. Cand wholesalers investing in sustainable do this alone and will require the entrance Other projects in the pipeline buildings. Tey are well ahead of public bodies of independent producers. An independent when it comes to commercial solar panels and systems and market operator was highlighted Search engine giant Google has invested investing in more sustainable modes of energy. in the National Development Plan as R103 million in the Jasper power project, a So where does South Africa fall on this scale necessary to widen participation and accelerate 96-megawatt solar photovoltaic plant near and what are we doing to make sure that the investment in the electricity sector. One way Upington in South Africa’s Northern Cape commercial sector is geared towards green? that South Africa is looking at resolving province, the organisation announced. this is through the Renewable Energy In the USA, companies like Wal-Mart and Independent Power Producer Procurement The project will be developed and funded IKEA have topped the charts in terms of their Programme, (REIPPPP), which aims to have by US solar energy project development frm efforts towards sustainability. Wal-Mart has 3 725 megawatts of electricity generated from SolarReserve, wind and solar farm developer installed more than 150 US solar projects and renewable energy sources for the national Intikon Energy and empowerment investment plans to have 1000 solar-powered locations power grid, and to transform the South company the Kensani Group. by 2020. IKEA has a strong commitment in African power grid. photovoltaic (PV) energy, and has plans to Rand Merchant Bank, the Public Investment double its investment in renewable energy, their One of the projects in REIPPPP is that of Corporation, the Development Bank of ultimate aim being to produce as much energy as the Energy Minister Dipuo Peters: a R240 Southern Africa and the Peace Humansrus they consume by 2020. million RustMo 1 Solar Farm developed Trust have also backed it. by black-owned energy group Momentous With the cost of business rising in South Energy. The group is one of 18 preferred Once complete, the Jasper project will be Africa, electricity has become a costly burden to bidders in the frst window of the Department one of the largest solar installations in Africa, bear and petrol is already at R13 a litre, now is the of Energy’s Renewable Energy Independent capable of generating enough electricity to era for sustainable business. It makes economical Power Producer Procurement Programme. power 30 000 homes in the country. sense to install renewable energy technologies. The bidders will generate 631MW of electricity from solar parks ranging in capacity Not to be left out of the renewable energy race, South Africa faces a power shortage and, from 5MW to 64MW. The government’s Eskom obtained the energy regulator’s approval in the next 20 years, will need to build drive to exploit renewable energy is gaining to build a R2.4 billion wind farm in the Western 54 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za
COMMERCIAL Underground coal gasifcation Vodacom Century City Wind generation map Cape. Construction is to begin this year, with the “At the same time, this is not a project we can putting a number of green initiatives in place farm to deliver up to 100MW of electricity by the execute alone, and partnerships such as the one to reduce the carbon footprint of travellers, end of next year. Te project, at Koekenaap in the [with Sasol] will help us maximise the benefts developers, manufacturers, retailers, service Vredendal area, is expected to enter commercial to South Africa.” providers and others who use the facilities of production by the end of next year. “Sere is Dube TradePort or work there. our frst large-scale renewable energy project,” Coal is an essential part of the national and Eskom chief executive ofcer Brian Dames said global energy mix, and UCG has the potential It is currently running initiatives to in a statement, “It demonstrates our commitment to provide opportunities in terms of mining; it minimise and mitigate greenhouse gases and to reducing our carbon footprint and to investing may more than double South Africa’s current synthetic pollutants, protect the ecosystem, in a sustainable energy future.” coal reserves, according to Eskom. run sustainable water and waste management systems, provide food security and boost the Te project is set to cost R2.4 billion and to be Another important tool in the renewable green economy. in commercial production by the end of 2014. energy effort is the Wind Resource Map, Another project in the pipeline is between launched in August, the Wind Resource Map Well-known cell phone giant, Vodacom, Eskom and petrochemicals firm Sasol. They is a vital instrument in government’s planning recently unveiled the largest array of solar have signed a research agreement to explore for efcient use of the country’s wind resources, panels on a building in Africa. Te solar panels the potential of underground coal gasifcation Energy Minister Ben Martins said in a on their Century City building in Cape Town (UCG) technology to boost the country’s energy statement. is made up of 2127 solar panels, and is expected reserves. to generate power equivalent to charging more By providing accurate, verifed information than 70 million cell phones a year, roughly 75% “Te agreement includes knowledge sharing on South Africa’s wind resources, the map will of all the electricity required by the building and aims at research cooperation between the also “serve as an all-important tool in enabling during peak times. “Through this particular two parties in evaluating UCG technology,” developers to fast-track their own efforts in project Vodacom aims to demonstrate that Eskom said in a statement, “UCG is a coal- developing wind farm projects,” Martins said. business can take the lead in promoting to-synthesis gas technology that uses air or renewable-energy solutions and stimulate the oxygen to gasify coal in the coal underground The map, generated from the Wind Atlas green economy,” their chief ofcer of corporate through a series of injection and extraction for South Africa project, currently covers the afairs said during the unveiling in Cape Town wells.” Western Cape and parts of the Eastern and this year. Northern Cape provinces. Eskom established its UCG technology With great leaps and bounds, the projects development in 2002 and piloted the project for It includes information, such as surface terrain that are underway in South Africa highlight five years; results showed that the technology efects that determine local wind climates, and the investment benefts of renewable energy in worked and was able to extract energy from estimates of wind speed and capacity, to help South Africa and how commercially viable this complex, poor quality coal resources. Te next prospective wind farm developers identify high- option is for businesses in all sectors. Te project step is to improve the quality of the gas, and potential zones. undertaken by Vodacom is set to save up to R1 Eskom and Sasol have a licensing agreement million a year and in the current tough economy with Canadian technology partner Ergo Exergy Dube TradePort’s aerotropolis is a green with rising costs, who doesn’t want to save Technologies for this role. development that is a fagship for sustainable money? Just as compelling are the economic development in Africa and beyond. and social benefts in local communities that the “Eskom is proud of its role as a global leader in this renewable energy projects will provide, through technology, which we believe has huge potential Situated on a 2 040-hectare site, Dube jobs and development. to produce economic, social and environmental TradePort is committed to promoting returns,” said Eskom’s sustainability division group sustainable development through minimising RESOURCES executive, Steve Lennon. and preventing environmental impacts, and Eskom www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 55
PROPERTY PROFESSOR ACHIEVING SOCIAL AND ECONOMIC RETURNS IN THE SOUTH AFRICAN PROPERTY MARKET PROFESSOR FRANÇOIS VIRULY François Viruly is a property economist with over twenty years’ experience in the analysis of the South African property market. Professor Viruly lectures in Urban Economics, Property Development and Portfolio Management at UCT in the School of Construction Economics and Management. ities and property developers across the globe have become acutely aware Cthat socially sustainable building projects provide attractive fnancial returns. For practitioners in the built environment it means supporting projects that are based on appropriate social, economic and environmental benchmarks. Moreover it means fnding an appropriate balance between private and public sector interests. For South African property investors the steep rise in building operating costs continues to place negative pressures on net operating incomes and returns. This has also increased the desire to seek construction methods and property management Households have increasingly become aware of the benefts that can be approaches that improve operating cost efciencies. In a typical commercial building secured through sustainable housing developments. But households, unlike some 50% of operating costs is attributable to rates and taxes and other utility costs corporate users, usually do not have the budgets to invest in green technologies. such as electricity and water. Moreover some 80% of the carbon emissions created Households, therefore, rely on city authorities to adopt programmes that promote by a building occur during the operating life of a building. Until recently investors sustainable environmental technologies at a city. This may include water recycling have tended to pass operating cost increases onto tenants. But tenants have technologies, efcient public transport systems, appropriate town planning become reluctant to absorb such costs and related increases. It has also not become regulations and building codes. Planning policies can play a role in encouraging uncommon for tenants to sign “green leases” that require property owners to meet “brown feld “developments rather than “green feld” developments which are based clearly defned operating efciencies. To meet such changing tenant requirements, on previously undeveloped land. The promotion of mixed use developments also South African property investment funds have been undertaking renovation improve the interaction that communities experience between home, work and projects that have seen retroftting of buildings and signifcant increases in electricity play. The development of efcient public transport systems will also infuence a efciencies of between 30% and 40%. household’s location decisions. For the developer, undertaking a property development with a signifcant green Cities that place an emphasis on sustainability and green developments also rating requires fnding an appropriate balance between higher development have an opportunity to improve the quality of life of lower income groups. This costs and expected investor returns. But achieving green-related efciencies is is achieved through the development of parks, the delivery of public facilities, not limited to the development phase of a property. Most of the efciencies are improving accessibility and afordable housing at high densities. It is important that generated by the investor’s ability to manage the property according to appropriate programmes which encourage sustainability should be based on interdisciplinary green benchmarks. Yet green buildings may incorporate levels of technology that collaborations that fnd an appropriate balance between the environment and can only be implemented with an appropriate level of expertise. The property meeting the economic needs of communities in diferent spheres of the built developer must therefore decide on a level of green technology that is appropriate environment. Such initiatives should also be based on an appropriate balance for the intended usage of the building. Thus while a certain technology could be between public and private sector interests. appropriate for a commercial building it may not refect the needs of a public RESOURCES building such as a school. Viruly Consulting For answers from the Prof email your questions to [email protected] 56 September 2013 SA Real Estate Investor www.reimag.co.za
June15 Brand Movement 071303 WE HAVE WHAT IT TAKES TO GIVE BACK. R90 million spent on 2 schools in 3 years. It takes a village to bring up a child. It takes an enlightened company to join hands with a nation thirsting for quality education and build a school, Meetse-A-Bophelo in Mamelodi, designed to improve the performance of children keen to learn. As part of its school building project, ArcelorMittal South Africa is spending million of rands providing new technologically advanced infrastructure. The second school, Nelson Mandela Primary, was handed over to the people of Mthatha in July 2013. This is yet more evidence that we have what it takes to give back. We are ArcelorMittal South Africa. transforming tomorrow Go to www.arcelormittal.com/southafrica to fnd out more. www.reimag.co.za 275x210 School 071301.indd 1 16/08/2013 09:48
Profit from Australian Property Discover the secret to investing wisely Looking to diversify your funds somewhere where you’ll be able to realise attractive capital growth and rental yields? Look no further. With Australia’s thriving economy and taxation benefits, there’s no better place to invest. Why Australia is your best choice for sound investments Australia offers profitable opportunities for property investors: Stable real estate prices Well-established legal and property buying system Significant tax incentives A strong currency and low interest rates Housing shortages and high property prices have resulted in a high rental demand Population growth and rising incomes means that demand for housing outpaces supply, causing prices to rise Diversify your funds safely & easily with PR Australian Properties If you are serious about making money in property investment, talk to the experts! Rooted in on-going research, our advice cultivates sound investments and gives life to your ambitions. Through expert property management and investment property solutions, we will identify which areas will give you the most profitable returns over time, and source the best projects for those looking to put their funds in a safe, stable environment. Helping families buy Australian property at the RIGHT TIME, in the RIGHT PLACE, for the RIGHT REASONS To find out more about how we can help you build a profitable portfolio, email [email protected] to set up a personal consultation, or visit www.praustralianproperties.com www.reimag.co.za
Profit from Australian Property REI Offshore Discover the secret to investing wisely New Offices In Kenya The Figures For Botswana Europe’s Retail Markets Looking to diversify your funds somewhere where you’ll be able to Are In realise attractive capital growth and rental yields? Responding to growing investment on the According to the IPD Botswana Annual An unprecedented 11.9 million m² of shopping African continent, leading African professional centre space is currently under construction in Property Consultative Index, the total return property services provider Broll opened its for all property in Botswana was 17.9% for the Europe, representing a 50% increase year-on- Look no further. With Australia’s thriving economy and taxation benefits, there’s new Kenya offices in Nairobi in August. year to December 2012, compared with 20.9% year (7.2 million m² in 2012), according to the no better place to invest. Broll Kenya will provide property services to for 2011. Tis fgure represents the un-geared latest research from global property advisor support demand in East Africa. Broll’s new CBRE. total return to directly held standing property ofce in Kenya answers the growing needs and investments from one open market valuation to Shopping centre development activity is largely Why Australia is your best choice for sound investments opportunities in the region, reports Malcolm the next. concentrated in emerging markets, with a Australia offers profitable opportunities for property investors: Horne, Group CEO of Broll. The return on Botswana property comprises large proportion (74%) taking place in Eastern Europe. Similar to last year, Turkey is forecast “Broll has been doing business in Kenya for some time now from its South African 11.0% income return coupled with 6.3% to remain the most active market with around Stable real estate prices headquarters with its international partner capital growth over the year. The underlying 3.7 million m² of shopping centre space under Well-established legal and property buying system CBRE,” explains Horne. “As the economic rental growth of 8.6% outstripped Botswana’s construction. Istanbul will be the most active Significant tax incentives hub of East Africa, with sound macroeconomic headline infation rate of 7.4%, underpinning development market in the coming years with 37 centres currently under construction, and political policy in place, Kenya is attracting both the capital growth and income return. A strong currency and low interest rates multinational companies. Nairobi is proving Industrial property outperformed other sectors including Axis Eyüp AVM with a Gross Housing shortages and high property prices have resulted in a high rental demand increasingly popular for corporate head ofces with a total return of 28.4%, closely followed by Leasable Area (GLA) of 150 000 m², and Yeni Population growth and rising incomes means that demand for housing outpaces supply, on the continent and in the region.” residential at 24.4%. İstanbul (GLA of 137 684 m²). causing prices to rise Valuable Input Diversify your funds safely & easily with PR Australian Properties If you are serious about making money in property investment, talk to the experts! Rooted in on-going research, our advice cultivates sound investments and gives life to your ambitions. Through expert property management and investment property solutions, we will identify which areas will James Ehlers, MD, Mike Smuts, Director, Stan Garrun, Neville Moss, Jay Padayatchi, give you the most profitable returns over time, and source the best projects for those looking to put their Atterbury Property Smuts & Taylor Executive Director, Head of EMEA Retail Director, funds in a safe, stable environment. Developments IPD Research, Meago Asset Managers CBRE “Developing a mall in “Te most efective “Now the Botswana “Te rapid growth of “JSE’s ofshore property Helping families buy Australian property at the RIGHT TIME, in the the heart of the fastest way to fnd fnancial property sector can new shopping centre players are now more RIGHT PLACE, for the RIGHT REASONS growing urban node security and peace of provide local and global development in attractive than local mind is to invest some in Africa created the property markets with counters given the emerging international prospect for an exciting of your wealth in a stable the comparative, precise markets is attributed to potential for further modern landmark. economy with a strong and timely data they a growing middle class, rand weakness.” Mall of Africa’s sheer currency, such as the increasingly require.” the urbanisation of large To find out more about how we can help you build a profitable scale, distinctive design, UK.” cities and consumer portfolio, email [email protected] to set up a exceptional location and demand for better personal consultation, or visit www.praustralianproperties.com top-notch retail mix quality retail.” puts it at the forefront.” www.reimag.co.za September 2013 SA Real Estate Investor 59
LONDON BY MIKE SMUTS Green London Invest in the future of eco-housing ities have a central role to play in mitigating each tree, in terms of aesthetic value, pollution He has repeatedly stated that he wants London climate change. Tey consume 75 per cent and rainfall management at £8,000 - meaning to be the ‘best big city in the world and to be Cof the world’s energy and produce 80 per the total value of London’s trees is more than recognised as a world leader in improving the cent of its greenhouse gas emissions. £4 billion. environment locally and globally, by tackling climate change, reducing pollution, developing a It may therefore come as a surprise to many to And London is also relatively “green” in the low carbon economy, consuming fewer resources learn that London is one of the greenest cities in the energy efficient sense as well, with Londoners and using resources more efectively. world. Viewed from the air, more than half of the being responsible for just 8 per cent of the UK’s area is green or blue – amazing for one of the world’s total emissions (equivalent to an estimated 44 Public transport initiatives, such as the London major cities. Towering glass skyscrapers coexist million tons of CO2 in 2006). Cycle Network plays a mayor part in these green with allotments, rivers, beautiful parks, gardens goals. Per capita, Londoners already have a far and tree-lined streets. The Mayor of London, Boris Johnson, has smaller carbon footprint than the UK average always been a staunch supporter of a greener because of the high usage of public transport and Tese precious lungs of greenery, all contribute to London, often seen cycling to work on the the density of development. the capital’s ‘urban forest’ – with London boasting London Cycle Network (LCN), comprising over six million trees. One recent study put the value of a thousand miles of cycle routes. By this September, two London bus routes – the 24 and the 11 – will be serviced entirely by Mayor Boris Johnson’s new iconic, eco-friendly Route master-inspired buses. The New Bus for London is the greenest diesel electric hybrid bus in the world, and will reduce CO2 emissions in the capital by around 20 600 tons a year when all of the 600-strong feet is in use in 2016. Te buses are just one part of the Mayor’s plans to make London a greener and cleaner place to live, the successful “Boris Bikes” scheme being another such initiative. Now, 14% of commuters into central London cycle to work, compared to just one per cent in the 1970s, and car ownership is lower in the capital than anywhere else in the country. Green house Another key element in making London a world leader in tackling climate change is the issue 60 September 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za
OFFSHORE KEY DESIGN of housing and new developments. Housing heating, mechanical ventilation and cooling CONSIDERATIONS INCLUDE contributes 38 per cent of the total CO2 emitted and the specifying energy efficient lighting and from London each year – over half of it from appliances. heating during the cold winter months. Maximizing the controlled use of Clean: supplying energy efciently 1 passive solar energy in the layout and The revised “London Plan” (as highlighted in Developers second priority is supplying energy orientation of buildings and design of the January 2013 issue of REIM) sets out policies more efficiently through decentralised energy windows. governing new development in London. generation, through small energy sources 2 Maximizing the use of passive generating electricity and heat near the point of use. At the heart of the Plan are policies ensuring ventilation. London’s new buildings are both ready for the The London Plan expects all major new 3 Using energy-efcient window impacts of climate change and can reduce their developments to connect into existing heating glazing and frames. contribution to London’s overall CO2 emissions, and cooling networks, or provide site-wide CHP 4 Increasing air tightness in the conserve water, mitigate fooding and safeguard (Combined Heat and Power) networks where biodiversity. Through this initiative, and in feasible, unless site specifc solutions combining building envelope. conjunction with the Code for Sustainable Homes, low carbon or renewable energy generation achieve Making appropriate use of thermal central government and the London Mayor have a greater reduction in CO2 emissions. 5 mass and insulation; and committed to making all new housing zero carbon Green: using renewable energy Installing energy-efcient lighting by 2016. 6 Where feasible, developers need to incorporate and appliances. A zero carbon home is one whose net carbon on-site renewable energy generation to reduce dioxide emissions, taking account of emissions carbon dioxide emissions. Renewable energy Energy Performance Certifcates (EPCs) which, associated with all energy use, is equal to zero or generation methods include solar thermal systems, since October 2008, are a legal requirement negative across the year. biomass-fuelled heating and/or power, ground whenever a property is built, sold or rented. source heating and cooling, air source heat pumps, To achieve this, new developments will need to photovoltaic, wind power, and renewable energy An Energy Performance Certificate (EPC) is be designed and constructed to make the fullest from waste. a document that shows how good – or bad – the contribution to climate change mitigation and energy efciency of a property is and it is valid for “London is one of the greenest adaptation. Tis means minimising overheating, 10 years. reducing food risk, improving water efciency and cities in the world. Viewed protecting and enhancing green infrastructure, as EPCs look similar to the energy labels found on from the air, more than half well as taking steps to reduce carbon dioxide and domestic appliances such as fridges and washing other greenhouse gas emissions. machines. Tey grade a property’s energy efciency of the area is green or blue” from A to G, with A being the highest rating. Te London Plan states that all new development Greening existing homes proposals should make the fullest contribution to Estimated running costs for heating, hot water minimising carbon dioxide emissions in accordance It’s also easier than ever for Londoners to make their and lighting may also be shown on the certifcate, with the following energy hierarchy: existing homes more eco and cost-friendly thanks along with a list of recommended energy-saving to the government’s latest green initiative, the improvements. 1. Be lean: use less energy in construction and Green Deal. Put simply, the Green Deal, launched operation by incorporating sustainable design and in January this year, enables homeowners to take New build properties generally benefit from a construction measures, and by specifying energy out loans for specific improvements to reduce high rating, thanks to the government’s regulations efcient lighting and appliances; using less energy. energy bills, such as replacing an inefcient boiler, we discussed above, which are pushing developers insulating the loft or installing double glazing. Te to build to increasingly efficient environmental 2. Be clean: supply energy efciently by prioritising government and Mayor’s ambition is to retroft over standards. Second-hand property is likely to receive decentralised energy generation. half of London’s three million homes by 2025. a D or E rating. 3. Be green: use renewable energy. And for Londoners, taking steps to make their So while housing and construction undoubtedly homes more eco-friendly can have significant play a pivotal role in any “Eco Efcient” global city, Lean: using less energy fnancial benefts. Government fgures show eco- London’s visionary plans for public transportation, Before decentralised or renewable energy improvements can raise the value of property by as better urban infll and smart growth, and green technologies are considered, the first priority much as £25 000 in some areas. social design – is showing that it’s not just buildings for new developments is to reduce energy that make London one of fastest-developing green consumption. This means making the building With the rising costs of gas and electricity in cities in the world. fabric more efficient to minimise energy loss, the UK, savvy buyers and tenants now pay careful RESOURCES taking steps to reduce the need for electric lighting, attention to the information contained in the Smuts & Taylor www.reimag.co.za www.reimag.co.za September 2013 SA Real Estate Investor 61
USA BY SCOTT PICKEN bulbs, depending on the level of investment made. Backers of a new play might get tickets to the opening; more generous patrons might be invited to a champagne reception. This category could raise more than $700 million in 2013. The next biggest category is the donation market. Tis overlaps with the reward market: many artistic endeavors that use reward crowdfunding also encourage funders to contribute very small amounts of money, typically less than $25, without expectation of a return - except for the knowledge of having contributed to a worthy cause. Donors often receive a thank you in a program or liner notes. Traditional charities usually request donations to support their overall mission, and then decide for themselves how to allocate the funds. Crowdfunding portals can raise funds for individual projects, meaning donors can give to the project of their choice. Tis market may be worth more than $500 million in 2013. Venture capital, which gets the most media attention, is actually the smallest category. Traditionally, early stage startup companies are initially funded from credit cards and savings, Te property revolution has started and then reach out to friends and family. Tis usually covers the frst $250 000. Beyond that point startups look for money from individuals eloitte’s predicts that crowdfunding distinct categories of crowdfunding that vary (angels) or established venture capitalists, will be one of the 10 most important by type of portal and capital raised. with the first seed round raising perhaps Dtrends to watch in 2013. Tey predict $500 000. Expected changes in North Categories of crowdfunding portals that crowdfunding portals will raise $3 billion American securities regulation could make in 2013, double the $1.5 billion raised in 2011. Consumer lending is the largest category. it possible for companies to raise money via Financial institutions and payday lending a crowdfunding portal, with contributors Crowdfunding portals are websites that companies have for many years lent small receiving an equity stake in the company. Tis enable large numbers of individuals to amounts of money at relatively high interest category is the wild card for 2013. It could raise fnancially support a project or company, with rates to consumers with bad credit histories. more than a billion dollars if the rules change, each backer contributing just a small percentage Now, these services are available online through but less than $50 million if they don’t. (generally less than one percent) of the total crowdfunding. In the fve years between 2008 funding. A typical crowdfunded project has and 2012, crowdfunding portals likely lent Crowdfunding generally involves small thousands of backers. more than $1.5 billion. In 2013 these loans contributions at the individual level. are could to exceed $1.4 billion, up more than Although the top pledge packages can Crowdfunding’s growth matters for two 50 percent from 2012. be more than $10 000, on average the reasons. First, some crowdfunded projects raise individual contribution is likely less than a funds for new technological devices and media Reward-based is the second largest category thousand dollars in almost every category. content such as computer games. Second, the of portal. Individuals go to a website and Te funds raised for a particular project or portals themselves are likely to become a new support a specific project in exchange for a investment tend to be in the thousands or type of Internet portal. reward. For example, those assisting with the tens of thousands of dollars, although on development of a computer game may get a rare occasions they can be in the millions. Media coverage of crowdfunding tends to copy upon completion. Tose investing more For example, on one of the better known focus on its role as an alternative to traditional may receive a basket of games and a T-shirt. crowdfunded reward sites only 17 projects venture capital (VC); however, there is much Backers of a new kind of remote-controlled raised more than a million dollars and only more to the concept. In fact, there are four light bulb might receive a quantity of light two raised more than $5 million. 62 September 2013 SA Real Estate Investor www.reimag.co.za
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USA the really wealthy and the cars were built bespokely. Henry Ford came along, created mass production and said, “You can have any colour you like as long as it was black.” The Model T Ford revolutionised the transportation industry and made transportation available to the middle class. Wealth Migrate is doing exactly the same to international, commercial and local property, allowing everyone to create global wealth through property and it will revolutionise property forever! Wealth Migrate’s mission is to provide a global, self-service, crowdfunding property Still, across tens of thousands of projects and Donald Trump joined the industry in 2013 as solution, which takes advantage of local investments, the total funding can really add he funded a crowd-sourced portal called Fund property markets, through best of breed up. In the past fve years, the 30 largest lending Anything. Tis shows the maturity of the market partners and collective buying power. This portals raised more than $1.5 billion. Te largest and how quickly the industry has adapted. will be optimised by a Global IT Platform, reward platforms collected nearly half a billion providing transparency and efficiency of dollars cumulatively. Donation sites raised In 2013 the legislation in the USA has property markets! hundreds of millions of dollars. Venture capital now changed and allows investors to have a portals raised just tens of millions of dollars, but equity stake. Tis is perfect for property and Basically a simple solution to buy global property that number is expected to rise dramatically in allows Wealth Migrate to provide the first aggressively with like-minded sophisticated the near future. In aggregate, crowdfunding International Crowd Funded Property portal. investors and create global wealth. RESOURCES portals are already a multi-billion dollar industry, Basically the analogy is the same as motor growing at more than 50 percent a year. cars. Before Henry Ford, cars were only for IPS Invest CAPE TOWN Ground floor, Liesbeek House, River Lane, Mowbray PO Box 23644, Claremont, 7735 Tel: +27 21 680 5272 | Fax: +27 86 670 6490 Official South African marketing agent for LEPTOS ESTATES | www.LeptosEstates.com Contact: Jenny Ellinas | +27 83 448 8734 | [email protected] | www.cypriotrealty.com 64 September 2013 SA Real Estate Investor
LESSONS BY ANGIE REDMOND Creating YOUR wealth It all starts with YOU hen you think of the word it’s a trap to keep you paying your money to Internet at your fngertips, you control your ‘responsibility’ what comes to someone else for the rest of your life. Te best future. If you want to change your life through Wmind? Most people think of way to avoid it is to think of the good type wealth creation then get researching, find getting a job, saving money, buying a car, of debt, the type you want. Debt that earns out who the experts are and speak to them. then a house, followed by marriage and a you money. What does that make you think A lot of the property professionals started of white picket fence. Guess what: you just made of? Property is what you should be thinking. right where you are today, and most of them yourself poor. Yes, I said it, poor, and why you Yes, you take out a loan from the bank and are more than willing to help others achieve may ask? Well, easy: you followed the path of that’s debt, but if you buy a property and let their goals. So start researching today, speak no resistance and responsibility. it out, then it’s debt that’s earning you money. to people who will help you on the right And once you have paid that of, you are now path, make sure they deserve your trust, and Te biggest obstacle to attaining real wealth earning two incomes. Would an expensive car start planning your fnancial freedom. How is actually YOU. By living your life in a earn you an income? do wealthy people get even wealthier? They manner not conducive to creating wealth, you know and understand how to use money, they have failed before you start, but you can change Changing your attitude towards money goes surround themselves with people who know that, it all comes down to how you think about further than just the way you perceive debt; it’s how to play the money game. Your capital is a your life. Te frst thing you need to think of also about the money itself. What is money? seed; you can grow that capital into a forest by is debt as a disease. Tere are diferent types of It’s a piece of paper with a picture on it, any ruling your fnances. debt and the type of debt you want is debt that power it has over you, you gave it. Stressing is actually earning you money, not costing you and thinking about money all the time is Don’t just settle for ordinary, although it’s your salary every month. If you are spending exhausting. Just don’t do it, fortunes can be safe and comfortable. You can achieve more your monthly salary paying of accounts, car lost and gained in a day and more than one and that brings me to my last point: it’s about loans and clothing accounts, you have made mogul has lost it all, only to get it back again. how you see yourself. Most of the people who yourself poor. Change your mindset, change It’s very important that you learn to respect made their dreams come true had to battle the way you see those items. Tat new car you money and respect what it can do for you, huge adversity and they didn’t just sit in the want? It’s an anchor and it’s going to keep you without allowing it to take over your life. corner and think ‘I can’t do this, I want to, but from creating real wealth. That fancy new I don’t think I will succeed.’ If they had, half phone or gadget, it’s going to keep you working Investing in property is not just for the rich the technology we have today would never 9-5 till you retire and eke out an existence. You and educated, anyone can invest in property. have been invented. Believing you can do it need to start with the way you view luxury All it takes is the right knowledge, and and drive and determination are half the battle goods and money, because credit is not money, knowledge in this day and age is free, with the won. Te way to wealth starts with you. 66 September 2013 SA Real Estate Investor www.reimag.co.za
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