Guy de a Porte represented Distell and William Wakefield represented the Landlord, Imperial Distribution. The premises were previously occupied by Brandhouse and are situated in Manhatten Street, Airport Industria, Cape Town. Distell are moving their export and merchandising divisions into the property.

Guy de la Porte maintains an extensive network of trusted brokers to make sure that his clients always have access to all available properties in the market place. Airport Industria is proving to be an extremely popular destinaton for warehousing and distribution as its location between the N2 and N1 National roads and close access to the R300 link road is extremely central.

Francois Thevenau, Head of Valuations at RMB Private Bank recently visited several countries in southern Africa, with the view of establishing a Valuation Model for FNB Africa. He shares his acquired property ownership knowledge and comparisons with South Africa with you.

Before looking at specific country requirements, it’s a good idea to familiarise yourself with the most common forms of property ownership found across the continent:

Freehold ownership

This means full ownership of the property, be it land or land and the buildings on it. You have the the freedom to buy, sell, rent, or paint it pink, as long as municipal regulations are not contravened and taxes and services such as water, refuse removal and electricity are paid for.

Clusters are also sold as freehold title, although parts of the development like the roads are commonly owned.

Sectional Title is also a form of freehold ownership. In this case it is ownership of a unit, which is made of one or more sections, as well as co-ownership of the common or shared property. Some of that common area can also be purchased for exclusive use. A section is owned up to the middle or centre lines of the outside walls, the floor and the ceiling. The administration and maintenance of the common property is the responsibility of the body corporate, which is the collection of all the owners in the complex. The complex is managed by a board of trustees.

Leasehold title
Leasehold title, unlike freehold title, is not full ownership. As with freehold title, a leaseholder has the right to use and enjoy a property for the period of the lease.

With the consent of the owner, the leaseholder may sub-let the property, renovate it or add to it. If the property is a plot of land, the leaseholder is entitled to – and is often obliged to – erect buildings on the property. The buildings become the property of the owner at the end of the lease.

Leasehold property is usually owned by the government, a local authority or an entity such as the South African Rail Commuter Corporation. Leasehold land is common in parts of Cape Town and along the Durban beachfront.

A leaseholder has more rights than a tenant, because the lease holding is for a relatively long period and is often registered on the owner’s title deed at the Deeds Office. Leaseholders may raise finance using the lease as security. The financial institution may register a mortgage bond on the lease at the Deeds Office.

A lease holding may be granted for any period of time; it is usually for 99 years. At the end of the lease period, it may start again and run for another defined number of years.

The owner of leasehold land may sell the land during the period of the lease. The price usually excludes any buildings erected on the land by the leaseholder or any improvements the leaseholder has made to the existing buildings.

Property ownership in other countries of the sub-continent

Zambia

Prior to 1 July 1975, land ownership was freehold. Since then, ownership has reverted to 99 Year leasehold, and the lease is renewable.
A land lease rental is payable to the Ministry of Land annually on September 1. It is a manual process i.e. payment cannot be made electronically or by cheque, but in person which often results in these rentals falling in arrears.

Sectional Title is its infancy and is regulated by the Common Leasehold Scheme Act. Owners of such units are not fully aware of their responsibilities towards the maintenance of the common property.

Ownership is regulated by a Deeds Registry situated in Lusaka, with a branch in the Copper Belt. There are some historical anomalies at the Deeds Registry, where certain properties have multiple title holders due to poor data capture.

Mozambique

The land belongs to the Government and not you. It cannot be mortgaged on its own but only once there are improvements / buildings on the land.
The Government grants a Right of Use & Benefits for 50 years, renewable at its prerogative for commercial properties and in perpetuity for residential properties.

Always check registration and ownership of rights to the existing improvements on the land for the remaining term and for the entity owning such leasehold rights because it is not uncommon to find multiple ‘leasehold’ owners are for the same property.

Rural/agricultural land transactions require the permission of the government before these can take place.

Payment for leasehold land consists of a once-off upfront fee which is fixed by statute, depending on where and what zoning the property has. There is no ongoing ground-lease rental payable.

Rates and taxes are payable for the duration of the tenure. Sectional Title is in its infancy and is regulated by the same principles as above.

Botswana

The types of land tenure are both freehold and leasehold – 50 years for commercial land and 99 years for residential land.

Sectional title ownership is recent and not fully in place.

There are some exceptions or anomalies, where ‘Catholic church’ land is sold on a 99 year leasehold basis, for both residential and commercial use.

Agricultural land requires ministerial consent for transfer and is reserved for citizens of Botswana.

Swaziland

There is a mixed bag of ownership ranging from freehold in urban areas as well as some original farms and leasehold where the land belongs to the Swazi nation and is in Trust with the King as the main Trustee. This land can be leased from 10 up to 99 years and a bond can be registered against it.
The Sectional Title Act exists but has not yet been promulgated, which means that you cannot purchase a sectional title unit yet.

There is one Deeds Registry in Mbabane which covers the whole country and which works on the same basis and principles as the Deeds Registry in South Africa.

Lesotho

The land belongs to the Basotho Nation, with the King as custodian and the Land Ministry / Commissioner of Land as the regulator.

Freehold does not exist, nor does Sectional title. Only leasehold is applicable, 60 years for commercial land and 90 years for residential land. A formal lease or base title is entered into, with terms and conditions similar to any title deed in South Africa, and registered at the Deeds Registry. What happens after the 60 or 90 years has not yet been tested in court.

Property ownership in South Africa

We have to acknowledge that until recently, many South Africans could, at best, own land on a 99 year leasehold basis, because of various restrictive Acts of Parliament thathave now been repealed.

What this now means is that today in SA, any person who wants to and is legally able and can afford the going price, can freely own property or acquire property on a freehold basis.

Buying a freehold property in SA, you are given title to that property and the ownership is registered at the Deeds Office. This means that the ownership is made public for all to know and to respect. There is one registry office in each of the nine provinces, where ownership and other rights relating to immovable property are recorded. Any South African has access to the Deeds Registries and at RMB Private Bank it is even easier, as it can be done via our computers using the Aktex software.

I must say, property ownership is far simpler in South Africa.

Cape Town’s Central Industrial Areas – Epping, Maitland, Observatory, Ndabeni , Paarden Eiland,Metro, Northgate, Parow Industria, Beaconvale, Airport, Elsies River

Cape Town’s North Western Industrial Areas – Montague Gardens, Killarney Gardens, Race Course Gardens

Cape Town’s – Peripheral Industrial Areas – Vredehoek, Woodstock, Salt River,

Cape Town’s Northern Industrial Areas – Bellville South , Bellville Triangle, Stikland, Brackenfell, Oakdale, Durbanville

Cape Town’s Southern Industrial Areas – Diep River, Retreat, Wetton, Ottery, Retreat, Capricorn, Westlake, Sheffield, Glossderry, Landsdowne

The newer more popular areas are Northgate, Montague Gardens, Killarney Gardens, Racecourse Gardens, Airport City, Capricorn, Westlake, Sheffield and Brackengate mainly due to their modern functional buildings.

Largely due to the Soccer World Cup, Google has been quietly driving down almost every street in the S.A. Metropolitan areas for the past year or so, with a rooftop mounted 360 degree camera, photographing every single property. To see how amazing this is, try it on your own home!

Julie Taylor, communications manager for Google South Africa, said: “This is a first for Africa, and a really exciting development for South Africans, who can now explore their country in new ways, whether a local neighbourhood in the city or a scenic coastal route they’ve never seen.

Guy de la Porte Investment Properties has included Street View’s on all properties listed. To see an example of how this works, click here and then on “street view” on the side of the map box. By clicking on the arrows you can go up down the street viewing properties or rotate the view by 360 degrees, all at your leisure, from your armchair.

To save you time, we try and include photographs, maps, plans and brochures and full details for most of our properties listed on our website. We are adding and modifying properties every day to keep you updated. You can subscribe to have new listings emailed to you that fit your criteria for type, value or size. You have only been subscribed to our newsletter, so please update your subscription to fit your personal preferences, its quick and easy, just follow the link at the bottom of the email we sent you.

Please view our properties on our website or if you want to discuss any property matters, please call Guy de la Porte on 083-400-2121.

A few years ago I read a very interesting book, by a Lebanese writer, one Taleb, titled the Black Swan. By now, I am sure, we’ve all heard the story of the “once enigmatic” Black Swan – but what was the lesson of this story? Simply, that when confronted with incomplete data one often draws incorrect conclusions, and therefore – people often think they know more than they actually do know. Perhaps one should pay more heed to what Donald Rumsfeld, former US Secretary of Defence said on occasion:

“There are known knowns. These are the things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But these are also unknown unknowns. There are things we don’t know we don’t know.”

Being ignorant when it comes to the unknown unknowns is understandable, but what constantly amazes, in respect of our continent and our country, is how little many people know of what are or should be, the known knowns.

Non-Africans, and I suspect even some South Africans, often fail to grasp that Africa is not a country, but a continent. And a very large continent at that; the land mass of Africa is larger than the combined land mass of China, India, the US and Europe.

This vast continent with its more than 800 million people is made up of 53 diverse countries whose inhabitants speak more than 2000 languages. And to mention only a second aspect of Africa’s diversity, per capita GDP in 2009 for example was 51 times higher in Equatorial Guinea than in the Democratic Republic of Congo. Another common mis-apprehension is that South Africa is a non-African country meaning unsuccessful.

How does one define a successful country ?

Would you agree that a country with the following score-card can rightly be defined as successful. Let us call the country X.

1. X has the world’s 26th largest population and 29th largest economy.

X’s per capita GDP, corrected for purchasing power parity, positions the country as one of the 50 wealthiest in the world
X’s currency is the 2nd best performing emerging market currency of the 26 monitored by Bloomberg.
The IMF’s World Economic Outlook ranks X in the top 10% of countries in respect of real GDP growth projections for 2010.
X was ranked as the 18th most attractive destination for foreign direct investment by Global Strategic Management Consulting Firm AT Kearney.
In the Economist Intelligence Unit’s Survey of Democratic Freedom, X ranks 31st of 184 countries.
X has sold $1.8bn worth of cars to the US last year, putting it ahead of Sweden and Italy as supplier to the US auto market.
X, according to the Open Budget Index, ranks 2nd worldwide in terms of the transparency surrounding its budgets, just behind the UK, it ties with France, and is ahead of New Zealand and the US.
X is ranked 30th out of 178 countries for ease of doing business ahead of Spain, Brazil and India according to a joint publication of the World Bank and the International Finance Corporation.
X’s media ranks 26th out of 167 countries in the Worldwide Press Freedom Index 2007, higher than any country in Asia, the Middle East or South America, and ahead of Spain, Italy and the US.
Tax revenue in X has increased by 220%, over the past 10 years.
By now, I am sure, most of you have guessed that the mystery country of course is South Africa. Or rather South Africa as we have just analysed it, by focusing on the positive aspects. Of course there is another side to the coin. Our unacceptably high levels of crime and low level of policing efficiency. Our inability to achieve the desired output for our vast expenditure on education bearing in mind that – 25% of our non-interest budget expenditure goes to education. Also the ever present fear of corruption and maladministration, etc., etc. I am sure everyone has his or her own little list.

I would submit, however, that the positive aspects, that I have briefly referred to (and there are many more) at least prove that contrary to the way pessimists perceive South Africa there are definitely two sides to the South African coin.

The challenge for every South African appears to be which side of the coin do you wish to focus on for example when you drive to Cape Town International Airport – which is the lasting impression on your mind – the unsightly (albeit diminishing) shack lands – or the glittering new Airport precinct. Cape Town International Airport is regularly judged to be one of the best (mid size) airports in the world.

But as pointed out earlier, South Africa is unquestionably part of Africa. So we should also look at Africa.

Firstly, how is Africa faring politically. Fortunately we now have a very handy yardstick with which to measure African Governance. That is the Mo Ibraham Index established by the like-named Sudanese billionaire and compiled by a team from The Harvard Kennedy School of Government. The criteria used to compile the index are: economic stability, corruption, security, rights, loans, elections, infrastructure, poverty and health.

The 2008 Mo Ibrahim Index stated that 31 of 48 sub-Saharan nations recorded higher scores than in the previous year’s survey.

What this index reflects is the reality – that in Africa today the political generation of the Bwana Mkubas (Big Men) is showing signs of passing – prompting some to speak of Africa’s Second Liberation.

Those with a clear understanding of modern Africa believe that it is the growing democratization of Africa that allows the warm water of the market to spread within its states – a trend that in turn reinforces the spread of greater democracy. Economic and Political freedom will continue to lead as it has already done, to economic opportunities, social upliftment and a new place for Africa on the World Stage.

What are the reasons for Africa’s democratization? I would like to mention only four:

One powerful reason for this welcome change is demographic. The post 1960’s African population boom means that the continent’s electorate is on average young. Never having lived under colonialism they are far more likely to hold their politicians responsible for the challenges facing their countries. Blaming colonialism is increasingly seen for what it is, namely an excuse for bad governance.

Another reason for the greater democratization is the bigger role played by women in African politics. In Ellen Johnson Sirleaf of Liberia the continent has at last elected its first female president, one with an open style and a technocratic bias.

Previously chauvinist parliaments across the continent are seeing the number of women MP’s increasing. In Rwanda, a recent African success story, the ratio is now 56%. In South Africa it is 33% with females constituting 40% of our Cabinet.

Further support for the Second Liberation has come from Africa’s increasingly vociferous fourth estate. In an ever growing list of countries the Media has become the guard dog that barks and that no longer readily responds to being told to shut up.

The justice system in a given African country may not yet always be able to bring its former leaders to book. However Frederic Chiluba in Zambia and Bakili Muluzi in Malawi are welcome exceptions. In addition, external institutions, supported by African Nations are being established to fulfill this role. Charles Taylor of Liberia is having his day in court in The Hague and the International Criminal Court has even issued an arrest warrant for the sitting President of Sudan, Omar Bashir.

Just as Africa’s condition and future development will have a massive impact on South Africa, so will developments worldwide impact on Africa. So what will the New World look like that South Africa will likely inhabit in 2020?

China with a population of 1.5bn by then will be close to overtaking the US as the world’s largest economy. India (2020 population of 1.3 bn) will be a top 5 economy and Indonesia will be emerging as an Asian Brazil, resource-rich and with a population of 275 million.

Commodity-rich countries from the “New World” – Africa, the Middle East, Russia, Indonesia, and South America will be prospering, because of Asian demand for their products. Most of the “Old World” – the US, Europe and Japan plus their adjacent, dependant regions such as Mexico and Eastern Europe will be stuck in a low growth economic rut. Indeed the coming decade may well be the West’s Japanese-style “lost decade”. The reason being that the demographic consequences of the ageing of the Old World – coupled to the fact that the US, UK & Europe – 15% of the world’s population – currently consume 70% of the world’s mobile savings – this means that in the West there will be higher interest rates, a higher cost of capital and consequently lower economic growth.

Overall South Africa will live in a more globalised, intensively competitive world economy that will be increasingly focused on an urbanizing, industrialising Asia. The region which by 2020 will also dominate the growth in global consumption, driven especially by the exploding middle classes of China and India.

By 2020 it is projected that South Africa will have a population in excess of 53 million of which 30 million will be under the age of 25. Forced by intensive competition from Asia on South Africa’s remaining industrial base our economy will have to refocus on its core, defensible, competitive advantages : mining, agriculture and tourism. Sectors that are doubly blessed in that they are all labour-intensive and export orientated.

South Africa’s trade focus will by then have diversified significantly from the West. Asia will have become by far our most important trading partner – China most obviously but with English-speaking India a strong number two. Indeed the Indian Ocean Basin – from South Africa in the West to Australia in the East will have become a very prosperous trading basin.

South Africa’s economic status will be secured by its natural-resource based development with targeted value-added propositions added on to this foundation further enhanced by the development of tourism – a “magic” industry in that it is an export-earning service sector capable of absorbing large numbers of lower skilled workers – especially in rural areas.

But then optimise these opportunities we South Africans will have to learn to think out of the box socially, politically and economically – designing policies that are made for South Africa and that are good for South Africa.

Events over the last two years have illustrated that the capitalist way is not only to be found in the West. We must and I believe we will develop a 2020 vision for South Africa that is much more globally relevant than to-day in the Asia-centred, commodity-hungry world we will live in by 2020.

Sceptics of course will have grave reservations as to our ability to develop and implement such a vision. The answer to such sceptics (perhaps the same people who were hoarding bully-beef and candles in the run-up to the 1994 election) is to point to the many successes we have achieved as a country – in 1994 and in the sixteen years since.

As Roelf Meyer recently wrote in Die Burger. In taking stock we should compare ourselves with comparable countries in the rest of the world. We should not compare ourselves to the developed or Western World, because we were never part of that world. We should compare ourselves with developing countries and also countries that recently emerged from internal conflict. In the latter group we are a shining star and within the international community South Africa is still hailed as a beacon of successful conflict resolution.

Roelf refers to a 2009 issue of the Economist in which comparisons are drawn between 180 countries and specifically the 65 best economies in the world.

According to the survey: South Africa has the 25th largest purchasing power, is the 39th largest exporter, is the 25th largest manufacturer of goods and the 28th largest supplier of services. On the competitiveness Index we rank no 45. Not great, but it looks a lot better when one notes that Brazil, considered one of the leaders of the developing world and with a much larger population ranks 43.

But these are the achievements of yesterday and today. And we have to get from 2010 to the 2020 Vision. Other countries or societies will not do it for us. The Government on its own cannot do it.

Inter alia, because as Henry Kissinger once said:

“No policy – no matter how ingenious – has any chance of succeeding if it is born in the minds of a few and carried in the hearts of none” and Ronald Regan said: “The most terrifying words in the English language are: I’m from the Government and I am here to help”.

Every South African who has the best interests of this country at heart, will need to do his or her bit. As general pointers I would like to leave you with a few suggestions:

“Make a positive difference, no matter how small, inter alia, by developing a positive mind set : Perhaps along the lines of what George Bernard Shaw said “You see things and you say “WHY?, but I dream things that never were and I say “WHY NOT?”

1. Harness the power of community

2. Engage in constructive participation

3. Do not be overwhelmed by all that is still unacceptable or sub-standard. Look around at the great things that are happening – Soccer World Cup.

We should not only see the positive – but embrace it and contribute to it. Surely then, but only then will exponential benefits flow to all of us who share this beautiful country.

Speaking in the session on the listed and unlisted fund sector following lunch on the first day of the IPD / IPE Real Estate Congress 2010, Aberdeen Property Investors’ head of investments Antonio Alvarez argued some funds were mismanaged while investors failed to understand the risks inherent in the vehicle they invested in.

He told delegates: “When things were going well, in my opinion, many funds were mismanaged. Sometimes fund managers were conflicted or not careful about the financial risks of their fund. So when values started going down, it opened ‘Pandora’s Box’ and a lot of problems came to light. When things are going well, people are not really looking, they become too relaxed.

“Investors were surprised about the downside effects of leverage. Many people forgot leverage has a dark side: it can help you get double-digit returns but can cause you to lose everything. Good property people don’t always understand the financial side or the risks within the underlying funds they are invested in In future, they have to understand better their risks.”

In the Q&A session which followed the four presentations, Alvarez added that “some investors will learn, some will not and when the market picks up again many will forget the lessons they learnt”. He concluded that, where it is not already common practice, now was “a fantastic opportunity” for managers to align their interests with investors.

Fund performance

Anne Breen, head of property at Standard Life Investments said performance of funds prior to the market collapse and subsequently has been closely linked to cash-flow management. “Large diversified liquid funds have broadly underperformed in this cycle due to the pressures to invest and need to subsequently sell quickly to meet redemptions. The funds that have outperformed are those that have managed their cashflows most effectively.”

The measurement of these funds going forwards can be benchmarked by an increasingly diverse range of national, multi-country and pan European Pooled Property Fund Indices (PPFI), said IPD’s head of fund services Cameron McVean. As well as a new IPD Pan-European Institutional PPFI, McVean told delegates plans were afoot at IPD to launch national PPFIs for France, Portugal and, possibly, the Nordic market.

There have of course been liquidity constraints in the direct market over the last two years, but, perhaps surprisingly, these restrictions have also manifested in unexpected corners of the property market. Breen said: “At certain points in the cycle, for some of our non-UK derivatives, there were no willing counterparts to take on those contracts – they were viewed as risky products by the market.”

Also in the session, Philip Koch principal McKinsey Consultancy commented on the direct property market “Whilst there has been, and remains, a lot of uncertainty in the market there has been some surprising excellent sector performance within Europe. Even in the middle of the crisis, two thirds of all European IPD sector posted positive returns throughout 2008 and 2009.” In 2008, Belgium and Denmark retail delivered 10.2% and 7.6%, respectively, while Finland’s residential sector returned 8.0%. Last year, Norwegian industrial returned 8.0%, while Finland’s residential delivered 7.5%

Eprop/IPD

It begins with the mindset that property ownership and management is a business like any other; you don’t exist without customers and your customers are primarily your tenants. If your tenants are happy they will remain in their premises and your landlord’s will be happy. Yes, you need to be firm but you also need to be fair.

“It amazes me how much money is spent on marketing to attract new tenants when so little effort is put into retaining tenants”, says Guy de la Porte. When you analyze the cost of finding a new tenant, advertising, letting commission, tenant installation allowances etc, isn’t it worth putting some time into developing a good tenant retention strategy?

Whether it is a factory, warehouse, office complex, industrial park or shopping centre, tenants want a constructive relationship with the landlord or property manager. Often rental is one of their biggest overheads and they want value for money. Why do you need to focus so hard on building long-term tenant commitments? It is always better to retain a tenant who is reasonable and pays their rent on time than to go into the market to fill a vacancy.

The bottom line is that you want your tenants to be in an environment that promotes their productivity and growth, and you can only achieve this by being a fair and responsive landlord.

Like a good marriage, it is all about relationships and communication. There needs to be a person dedicated to understanding and fulfilling tenant’s needs. Landlords, who under promise and over deliver, keep their tenants,

The problem is that property management companies under charge for their services and their property managers quite simply have too many buildings to cope. “We only take on buildings that make sense to us” says delaPorte. “We work for landlord’s that buy into our value system and we look after the building as though they are our own”. “We are proud to say we are not the cheapest, but we deliver the best value to our clients

Rental levels are also expected to rise during 2011 and accelerate thereafter as the global economic recovery gathers momentum. Limited supply of new space will also play its part in driving rentals higher. A quick scan of most major city landscapes reveals little or no new development activity and those developers undertaking projects have, in most cases, already secured leases for the new space being developed. Although developers are likely to find it easier accessing credit, stricter lending criteria will curb most marginal developments and banks will demand greater security, including a certain level of pre-letting before granting loans. This will place further downward pressure on the level of new supply over the next 3 years and will certainly result in very little speculative development.

Rental growth will also be boosted as shorter leases, signed at discounts to market during the height of the credit crisis, will be renewed at market rentals over the next 12 to 18 months. In most instances, landlords accommodated lower rentals for a short period of time to allow their tenants to avoid bankruptcies and maintain occupancies in their properties. With the economic recovery gaining traction, tenants are in a position to revert back to paying market-related rentals. Although it is difficult to estimate the exact quantum of rental uplift, by way of an example, Liberty International indicated at their March results presentation that they expect to add an extra £20 million to their rental revenue from renewals on short-term leases in 2010 and 2011. This would add approximately 5.4% to Liberty International’s net rental income.

Although the prices of listed property securities have rallied in the past 13 months (the MSCI US REIT index is up 144% since 06/03/2009), they remain more than 40% below their 2007 peaks. The current dividends are low, but reflect the fact that most listed property companies are retaining approximately 30% of their cash earnings to fund future acquisitions. On a cash earnings basis (i.e. rentals less property operating and administrative expenses) the average yield is approximately 5.7%, which is substantially higher than the 2.8% yield on the JP Morgan Global Government Bond Index (a proxy for bond yields) and cash, which is yielding 0% or a fraction of a percent in most developed markets. While the capital growth enjoyed over the past 12 months is not expected to be repeated, the high income yield remains attractive relative to other asset classes and will lend support to global listed property securities in the medium-term.

*Ian Anderson is chief investment officer of Grindrod Bank, Article from Realestateweb