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PRETORIA, GP, South Africa
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25 July 2014

What is a billion rand between councillors?

Questions arise about the real cost of Tshwane’s new headquarters.

An Artist's impression of the future Tshwane House.

At a special council meeting on Wednesday, the City of Tshwane’s council approved the fast-tracking of the public private partnership (PPP) for the building of a new headquarter complex. But what this will cost ratepayers over the 25-year duration of the contract, is not at all clear.
Little clarity was given during the council meeting and there was also very little discussion, apart from an exchange of insults and bartering between the ruling ANC and opposition DA.
Deputy city manager Lindiwe Kwele could not on Thursday clarify the discrepancy between the mayor’s statement earlier this year putting the cost at R2 billion, the city website that put it at R3 billion and an independent expert who put it at R4.3 billion. She said the city will submit a report to National Treasury where an assessment will be done.
A report from Treasury will come back to council “and then we can have this discussion,” she said.
The PPP was approved in 2006 and the Tsela Tshweu consortium led by Group Five was appointed in April 2011. Financial close has however not been reached. According to the new fast-tracked timeline, the council aims to reach financial close by the end of next month.
The project entails the building of a 35 000m2 new headquarter complex on the same site where its predecessor Munitoria was demolished last year, as well as a 25-year operational phase. During that period the consortium will be responsible for the operation and maintenance of the complex. At the end of the period the building is handed to Tshwane at no cost.

Demolition of the Old Munitoria.

Porsche buys Kyalami Race Track for record auction price

Porsche buys Kyalami Race Track for record auction price

Motorsport fans can breathe easy knowing that one of the most valuable pieces of land in Gauteng will carry on as a racing facility.

24 July 2014

Joburg architects, estate agents meet over planning delays

Joburg architects, estate agents meet over planning delays

Joburg's economic development and growth is being stunted by its own development planning department which is 'imploding'. This is what architects, estate agents and agents or runners who assist by going in to submit plans, claim.

They are so desperate and frustrated that they called an urgent meeting last week to discuss the way forward to get the city to speed up the approval of plans, site development plans and rezonings.

About 32 people attended, representing people who had daily dealings with the planning department.

Judge slates 'arrogant' municipality over property transfer ineptitude

... 'despite the ringing phrases of the constitution and the Constitutional Court, Canton Trading's requests were met with the inscrutable face of the bureaucratic sphinx'.

I like it!

Gareth Shepperson
Commercial and Property Attorney

Judge slates 'arrogant' municipality over property transfer ineptitude

If your municipality is messing you around, you might enjoy the comments made by a court this week when faced with evidence of outrageous bureaucratic inefficiency and arrogance.

It's a case that should lead to the sacking for uselessness of certain Buffalo City officials - though you would be a fool to put money on this happening.

Landmark office building underway in Sandton

If the City of Joburg is willing to continue to approve such projects, may I make one small request ... PLEASE update the infrastructure to accommodate the development.  In particular, please indulge me for a moment while I indulge in some venting about my pet-hate ... the M1 - GRAYSTON OFFRAMP.

There are awesome examples (just up the road) of how a little bit of planning (and a lot of expense) can greatly improve traffic flow.  Eliminating traffic flows in different directions having to criss-cross will alleviate a significant amount of suggestion.  The Allandale, Atterbury and Lynnwood offramps on the N1 are great examples.

Does anyone know of any plans for Grayston?

Gareth Shepperson
Commercial and Property Attorney

Landmark office building underway in Sandton

The new 86 993 sqm corporate headquarters being built for Discovery in Sandton at a cost of more than R2.5 billion is believed to be the largest single commercial office building in Africa.

The eight-storey building will have two wings plus a ground floor with nine basement levels providing 5 100 parking bays. It will serve as Discovery's hub for its growing international business that now has operations in South Africa, the US, the UK, Australia and Asia-Pacific.

It will also bring all of Discovery's more than 5 000 employees in four buildings in Sandton under one roof.

It is being developed on a site at the corner of Catherine Drive and Rivonia Road by a joint venture between listed Growthpoint Properties and Zenprop.

Earthworks on the site commenced in March and the construction of the basement levels is scheduled to start in October and the office levels in January 2016. Discovery is scheduled to take occupation of the building in January 2018. Its initial lease period is for 15 years with the option to renew.

James Tanneberger, the chief executive of Zenprop Property Holdings, said this week that this iconic building would be the largest single office development to take place in Africa.

22 July 2014

Joburg billing crisis deepens

Joburg billing crisis deepens

The billing crisis, which the City of Joburg has been claiming is largely over, is about to take a turn for the worse.

In a shock announcement his weekend, we learnt that city officials have been tampering with residents' meters to inflate bills, they have been deliberately overbilling and unilaterally, with no consent, rezoning properties for additional rates.

Minister mulls end to free housing

Fair comment by the Minister BUT once you have created an expectation (by campaign promises, etc.) it is somewhat disingenuous to then criticise people's "sense of entitlement".  Is it not?

Gareth Shepperson
Commercial and Property Attorney

Minister mulls end to free housing

Human Settlements Minister Lindiwe Sisulu is determined to eradicate the 2.3 million housing backlog before thoughts may turn to long-term considerations of a possible end to free government housing - although not state-subsidised housing.

Key to getting to grips with South Africa's housing logjam is a database to get a full picture of who still required free housing 20 years into democracy and to eliminate fraud, corruption and housing waiting-list queue jumping.

'It never was the intention of this government to give free homes ad infinitum,' Sisulu told The Star yesterday.

'What makes an 18-year-old think the state owes them a house? It's a culture of entitlement... we can't continue with a dependency culture.'

When the government put in place the provision of free housing, it was to correct the wrongs of the past.

But beyond a certain point, questions needed to be asked.

'Somebody has to have the courage to say this is not what we intended,' she said. Free housing is not in the Freedom Charter nor in the constitution.

It is a potentially controversial stance. But the minister, who returned to the human settlements portfolio after the May 7 elections following an absence of several years, maintained there were many options to ensure that no vulnerable, poor South African was left without access to adequate shelter.

This included providing state housing subsidies through the social grant system and providing affordable rentals.

Beneficiaries of free government housing are anyone earning less than R3 500 a month.

The Star

'Great difficulty' in obtaining home-loans for affordable properties

With our client about to launch a new affordable housing development in the Mamelodi area, I am about to test the accuracy of the comments below ... FIRST HAND ... as we have been appointed to assist with bond origination.

Further reports to follow!

Gareth Shepperson
Commercial and Property Attorney

'Great difficulty' in obtaining home-loans for affordable properties

There is a huge demand for affordable housing, but great difficulty in obtaining home-loans, says Shiraaz Hassan, commercial director for Asrin Property Developers.

'One out of the four major banks are active participants at present, but the others seem reluctant and their credit vetting processes are far too stringent, which effectively means we are selling one unit four times before a buyer receives a bond to buy and the deal is successful,' said Hassan.

Tshwane council official held over building plan bribe

I applaud the efforts of the city in curbing corruption.  It is unfortunately a scourge on our society and must be stamped out at all costs if our nation is to truly prosper.

You will never totally eradicate corruption but the best way to do so is to ensure that the normal process is so efficient that there is no need to look for a "shortcut".  By eliminating the demand, you destroy the market.

There must therefore be a two-pronged approach to fighting corruption:

1. Zero-Tolerance to offenders who must be energetically prosecuted and harshly sentenced; and

2. Eliminate demand by making services so efficient that there is seldom (if ever) a need for a shortcut.

Gareth Shepperson
Commercial and Property Attorney

Tshwane council official held over building plan bribe

Some of the building plans that catapulted the Tshwane metro to the status of South Africa's building capital standings may have been approved fraudulently.

This is the implication of yesterday's arrest of a City of Tshwane building inspector suspected of accepting bribes from developers to approve plans for their developments.

Tshwane losing R150m a year to electricity theft

The article below from the Pretoria News was actually published about 2 weeks ago, so it's not exactly "breaking news" but I picked up on it again when the news relating to electricity theft in Joburg broke over the weekend.  According to reports, it is alleged that it is not only your typical "squatter camp type" illegal connection but apparently extends to large shopping centres, prominent hotels and the like.

The names of the shopping centres, hotels, etc. were not revealed but it will certainly be extremely interesting and a enormous disappointment to those of us involved in the commercial property sector.

Gareth Shepperson
Commercial and Property Attorney

Tshwane losing R150m a year to electricity theft

The City of Tshwane loses electricity worth about R150 million annually through illegal connections and meter tampering.

According to City of Tshwane spokeswoman Lebogang Matji, while illegal connections are most prevalent in informal settlements, they are not confined to these areas.

04 July 2014

South African city sprawl continues unabated

It makes absolutely NO SENSE to continue to build outward instead of upward.

By any logical stretch of the imagination, can anyone justify moving further and further away from resources, jobs, infrastructure, transport, etc., etc.?

Regular readers of the Blog will by now realise that this is my personal crusade, namely to highlight that absolute waste that is created by urban sprawl.

This was made even clearer to me on a trip to China a couple of years ago.  The insanely rapid expansion of Shanghai is particularly noteworthy as it serves to highlight that where there is a will there is a way.

The expansion in high rise housing is astonishing.  We drove for kilometre after kilometre in a never-ending see of high rise accommodation.  Just consider the number of housing units required to accommodate the expanding population.

In SA, particularly Gauteng, I sometimes hear that no matter how many houses/schools/hospitals are built, it can't cater for the rapid urbanisation of the SA population.  However, I am pretty certain that no SA Metro has experienced an increase of 10 million people in 10 years.  As I said, where there's a will there's a way.

More of my comments on this Blog on the inefficiency of urban sprawl can be seen here:







Anyway, what started me off on this tangent (again) is the following Article from the Cape Argus

Gareth Shepperson
Commercial and Property Attorney

South African city sprawl continues unabated

The latest construction statistics show a mismatch between public policy to densify residential areas and private building trends.

South African informal settlements show tremendous growth

South African informal settlements show tremendous growth

The 'formalisation' of property marketing in South Africa's major informal settlements is an on-going process, the impact of which is now being felt across the country.

The good news, says Tony Clarke of the Rawson Property Group, is that this is now also raising prices in these areas at an unprecedented rate and fostering a desire for home ownership among younger people.

In the major Cape Town suburbs of Khayelitsha and Gugulethu, average home prices, says Clarke, have risen very significantly in the last few years.

03 July 2014

Property development in Tshwane and Cape Town outstrips Joburg

This article from the Star newspaper is a little bit surprising, given the number of cranes that dot the skylines of Sandton and Waterfall.

Gareth Shepperson
Commercial and Property Attorney

Property development in Tshwane and Cape Town outstrips Joburg

Cape Town, Tshwane, Ekurhuleni and eThekwini last year all approved building plans valued at more than Joburg's plans. And Tshwane and Cape Town residents completed buildings of greater total value than Joburg.

While Joburg's numbers went down, the plans for Tshwane, Cape Town and eThekwini went up; Ekurhuleni's completed buildings value went down, but the value of the plans submitted went up.

The City of Joburg has not responded to requests since Friday for an explanation, including queries about whether there were problems

Tgetting plans passed in Joburg or about the size of the planning- approvals backlog. The figures are in Statistics SA's annual report under 'Selected building statistics of the private sector as reported by local government institutions, 2013'.

The report looked at building by the private sector - business, industrial, office and residential - but excluded building by the government.

It also listed the value of building plans passed in 2013 as: Joburg R7bn (R7.72bn in 2012); Tshwane R14.7bn (R11.7bn in 2012); Ekurhuleni R9.6bn (R7.8bn in 2012); Cape Town R13.9bn (R11.9bn in 2012); and eThekwini R9.5bn (R6.8bn in 2012).

Nationally, the total value of building plans in 2013 was R86bn - up by about 17 percent from 2012.

The value of buildings completed in 2013 were: Joburg R7.2bn (R7.6bn in 2012); Tshwane R9.5bn (R7.6bn in 2012); Ekurhuleni R3.5bn (R4.3bn in 2012); Cape Town R13bn (R8.5bn in 2012); and eThekwini R5bn (R4.6bn in 2012).

The data in the report was crucial for Joburg.

'The results of the survey are used to monitor the state of the economy and the formulation of economic policy,' Stats SA said.

Population figures from the 2011 census from Stats SA showed that Joburg was the biggest city in South Africa, with a population of 4.4 million, followed by Cape Town with 3.7m, eThekwini 3.4m, Ekurhuleni 3.1m and Tshwane 2.9m.

Bryan Wallis, the director for practice and education at the South African Institute of Architects, expressed surprise at the figures for Joburg compared to the other metros.

He could not explain it, but noted there had been indications from the institute's membership that the City of Joburg was in the process of introducing measures to improve the effectiveness of its planning-approval processes.

Joburg DA councillor Graham de Kock, who serves on the council committee that oversees the planning department, couldn't understand the figures. 'Joburg is the biggest city in South Africa,' he said. 'This can't be right. It doesn't add up.'

He said that maybe people were undervaluing the plans they submitted, or there were delays in the planning department, possibly because it was understaffed, or possibly people were not filing plans as legally required.

If residents were ignoring the legal requirement to file plans - possibly because of difficulties in getting city officials to process them - it meant that illegal building was on the increase, which was the sort of problem that could lead to urban blight and scare off investors, De Kock pointed out.

'This is the tipping point of whether a city survives or doesn't,' he said.

Two weeks ago, The Star reported that the city's machine for printing copies of building plans had been broken for five months, causing huge backlogs in getting plans approved.

The crisis meant that developers could not get copies of plans for starting renovations or new buildings.

At the time, Joburg metro spokesman Nthatisi Modingoane confirmed the machine had been problematic, but said the city was buying a new one.

The Star

'Make greater use of paid experts in sectional title schemes'

'Make greater use of paid experts in sectional title schemes'

It is sometimes said that up to 25% of South Africa's sectional title schemes are inefficiently managed and in many cases the units in these lose value year after year.

This situation, says Tony Clarke, Managing Director of the Rawson Property Group, is in nine cases out of ten due to the sectional title scheme not being managed properly and having trustees who are inexperienced or lazy.

"Even a rudimentary investigation of body corporates will usually show that many of the trustees ought never to have been appointed because little or nothing in their background equips them for their new task."


As we are beset by industrial action yet again, following on so closely after the disastrous strike in the platinum industry, I found myself thinking about this in more detail this morning as I listened to the news on Radio 702.

I have always simply followed the logical way of thinking about wage negotiations, namely:
  1. The employees say they require X;
  2. The employers say they can only afford Y; and
  3. The two meet somewhere in the middle, let's call it Z.
Firstly, there is an inherent flaw in the logic here.  If the employees really require X and they settle for Z, then their basic requirement is not being met and they are "out of pocket".  Similarly, if the employer can really only afford Y, then by paying Z they are fundamentally harming the business (perhaps fatally) to the detriment of all.  So, whilst Z may represent a compromise, it ultimately benefits neither the employer nor the employee. Logical?

Secondly, I consider myself a conservative capitalist with social responsibility leanings. Oxymoron? Through these capitalist spectacles, I have long held the view that people can only be paid what their productivity justifies.  Therefore, in South Africa, with low productivity (when benchmarked against other nations), we "deserve" to suffer from correspondingly low wages. However, this morning on my drive to work, listening to the radio, I was struck by an epiphany!  Maybe it is not that our wages are too high for our productivity/skills/education but that our productivity/skills/education is too low for our wages.  I know that most people are saying this is merely a play on words (or semantics) but I now think that a shift in mind-set is required.

If we approach the problem with a view to raising productivity/skills/education to a level that matches the salary rather than merely paying an amount that we believe matches the productivity/skills/education of the employees, we can completely disregard Y and Z in the above scenario and aim for X (or above).  However, it would be incumbent upon government, business and the trade unions to fundamentally focus upon productivity/skills/education.

Utopia? Maybe. The problem is that this is a medium to long term solution and in a world where everyone wants a quick-fix.

Gareth Shepperson
Commercial and Property Attorney

02 July 2014

Collapsed power station part of planned R1 billion property development

Cable theft is the scourge of our society (and strikes, unemployment, lack of skills, poor education, etc. etc.) ... but let me just focus on cable theft for the moment.

If you read the article from the Star newspaper below, you will come across a quote that:

'To stem the rampant theft of the structural steel, the developer has had the site fenced off four times, but the fencing has consistently been stolen, including electrified fencing. The developer has made all reasonable efforts to secure the site.'
Muthwa said about 25 arrests had been made over the years.

When you consider the vast number of power failures that Eskom has recently blamed on cable theft, the situation is clearly untenable and something must be done.

In my opinion, only a massive clamp-down on scrap metal dealers can alleviate the problem.  If there is no market to sell the cables, then there is no incentive for anyone to steal them... is there?

Pleased to see our new colleague at the Gauteng Provincial Council of SAPOA so extensively quoted in the Article ... Kululwa Muthwa, the chief operating officer of the Joburg Property Company (JPC)

Gareth Shepperson
Commercial and Property Attorney

Collapsed power station part of planned R1 billion property development

The death of at least four people following the collapse of the old Orlando power station in Soweto on Wednesday should never have occurred.

Six others were injured, leading to rescue attempts over several days following the collapse.

The site as it looks today.
The power station should by now have been a thriving R1 billion business centre, but instead it's a disastrous, dangerous site scheduled for demolition.

Today, Joburg and provincial authorities were to meet to discuss the building's demolition, while it seems the developers still want to push ahead with their plans for the area.

The power station collapsed last week after ongoing looting of the structural steel by scrap metal scavengers. The site is owned by the City of Joburg.

'The power station is a heritage building, and is protected by the Provincial Heritage Resources Agency (PHRA). Any intended demolition to heritage stock can only be done in consultation with the agency,' Kululwa Muthwa, the chief operating officer of the Joburg Property Company (JPC), explained.

'The remaining structure is at a potential risk of further collapse. However, a structural investigation will be conducted to confirm this.'

Muthwa said a meeting was scheduled for today between the JPC and the agency, the developer and a structural engineer to assess the structural integrity of the remaining structure.

'The developer has secured the site to minimise the risk of illegal entry to the site,' Muthwa said.

'The demolition can only proceed on obtaining permission from PHRA, and will be done immediately thereafter,' he added.

An Artist's impression of the Development

The Orlando power station was supposed to have been part of a huge development, supported by the council, but so far it hasn't got going.

The developer is the Soweto Power Station Mall (SPSM), which would not comment.

But yesterday there were hints that the developers still want the project to go ahead.

A source close to the developers said the plans for phase one were with the council for planning approval, and there were 'immediate plans' to build a community centre.

The developers hoped to build 'something special', he said, and hoped to tackle the crucial problem of job creation - in the construction and running of the centre.

The developers reportedly hope to rebuild after last week's tragedy.

Muthwa said the power station was decommissioned in 1998 and that the JPC had been trying for a decade to facilitate its redevelopment as part of a bigger development project.

The Star's archives record the JPC's announcement in March 2005 of the Orlando Ekhaya project, which was supposed to include 'shopping centres, business nodes, conferencing and recreational facilities, entertainment, specialist shops, hotels and waterfront activities'.

It was also supposed to include the power station, the Orlando cooling towers, the Orlando Dam and the Vista conservation area. An estimated investment of about R400 million had been planned.

A year later, the development was estimated at about R1bn.

At the time, it was reported that the power station part would be developed by a consortium.

In February 2006, the then Joburg mayor, Amos Masondo, symbolically turned the first sod in the new development, which was mentioned in his State of the City address a few weeks later and again the following year.

By 2008, there were hints of problems, with the JPC admitting the development was behind schedule because of difficulty getting funding approved.

By 2010, only R322m of the required R1bn had been raised, with the global economic crunch blamed.

Muthwa said that as part of the development plan, the building was handed over to the SPSM in January 2012.

'To stem the rampant theft of the structural steel, the developer has had the site fenced off four times, but the fencing has consistently been stolen, including electrified fencing. The developer has made all reasonable efforts to secure the site.'

Muthwa said about 25 arrests had been made over the years.

The Star

Accolades for Pretoria as 'best in Gauteng'


Gareth Shepperson
Commercial and Property Attorney

Accolades for Pretoria as 'best in Gauteng'

Pretoria is the best city in Gauteng for those looking for a place to enjoy the highest quality of life.

This is in terms of the Gauteng City-Region Observatory survey which measured the quality of life in all municipalities in the province.

The survey saw the capital city emerging tops against its peers such as Ekurhuleni and Joburg.

Premier David Makhura congratulated the City of Tshwane for this achievement in his inaugural state of the province address at Thokoza Auditorium in Ekurhuleni yesterday.

Makhura said Tshwane's achievement was a challenge for other municipalities in the province to copy what was working in the city.

Mayor Kgosientso Ramokgopa told the Pretoria News he was humbled by the accolades from the State of the Province address and the appreciation by Makhura of the work Tshwane was doing.

'We believe the accolades are words of inspiration which should fire us to greater heights to improve efficiencies, better service delivery and continuous engagement and cooperation with our people,' he said.

Ramokgopa said the city's Vision 2055 had mobilised the entire city administration and staff at the coalface of service delivery to excel.

'The increased capital spending, the number of public private partnerships, focus on youth development and economic participation catapulted the City of Tshwane to be the best in Gauteng.

'We look forward to heightened support, co-operation and improved intergovernmental relations with the provincial administration under Makhura's leadership,' the mayor added.

Pretoria News

Sapoa's honours spread between cities

Sapoa's honours spread between cities

No 1 Silo at the V&A Waterfront was the overall winner this year at the South African Property Owners Association ( Sapoa) Innovative Excellence in Property Development Awards , during the Sapoa convention and property exhibition, which was held at the Cape Town International Convention Centre last week.

No 1 Silo at the V&A Waterfront.
Following a record number of entries, Sapoa announced the top performers in 10 categories and four overall awards, as well as the top overall award won by No 1 Silo.

'The winners highlight excellence in design and innovation. They meet today's challenges and tomorrow's needs, and reflect the cutting- edge of design in South Africa and globally,' said Sapoa chief executive Neil Gopal.

Sapoa worried about inconsistent property valuations

There is much talk in South Africa about creating jobs and widespread acknowledgement that the primary driver of job creation can only be small business.  The Cabinet has recently been expanded to include a Minister specifically to deal with small business.

You have to create an environment where small business stands the greatest chance on thriving.  There is a lot of focus on draconian labour laws but there is so much other red tape, levies, duties, tariffs, legislation, etc. that operate as a handbrake to small business (instead of an accelerator).

The other day I saw a great suggestion (I can't recall where) that basically suggested that the Rule of Parliament should be that for every one piece of legislation passed, two pieces of legislation must be repealed.

The simplification of billing by Municipalities could greatly benefit everyone and maybe Municipalities should set a goal of cutting their complicated billing structure by 50% in 2 years. 


Gareth Shepperson
Commercial and Property Attorney

Sapoa worried about inconsistent property valuations

Inconsistent rates increases and property valuations by municipalities in South Africa's metropolitan councils have come in for criticism from the SA Property Owners' Association (Sapoa).

The association, the voice of the commercial property sector, claimed yesterday that annual increases in municipal rates and taxes had resulted in 4 500 job losses and about R2.8 billion in lost economic output.

Blair Athol Golfing Estate residents win court appeal over access

Blair Athol Golfing Estate residents win court appeal over access

Fuming residents of the upmarket Blair Athol Golfing Estate, who were barred from playing golf on this world-class Gary Player-designed golf course as they had not paid their property levies to their homeowners' association, urgently turned to the North Gauteng High Court.

This 'golfing application', as it was referred to by Judge Neil Tuchten, is part of an ongoing battle between the residents on one hand and the Blair Athol Home Owners Association and property developer Robby Wray on the other.

The estate - home to the rich - houses a gated community north of Lanseria Airport, but falls within the municipality of Tshwane.