Construction World July 2019

JULY 2019

COVERING THE WORLD OF CONSTRUCTION

WORLD

CR O WN

P U B L I C A T I O N S

SCANIA’S NEW GENERATION TRUCKS A solution ahead of its time

144 Oxford Road A FLAGSHIP PROJECT

WESTERN CAPE’S innovative PUBLIC-PRIVATE URBAN DEVELOPMENT

BEST PROJECTS 2019: Entries open

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CONTENTS

04 Carbon Tax: Legal assessment guide for companies How will carbon tax work and does it apply to you? 06 Consider mediation to save time and money in resolving disputes Mediation can save you millions in legal costs.

23 Flagship 144 Oxford Road This project is Growthpoint and the Paragon Group’s largest project currently. 24 At the heart of Cape project to improve lives Concor’s leading role in Cape Town’s public-private urban development. 27 Sydney Metro Northwest opens SMEC was part of a JV to realise one of Australia’s biggest public transport projects. 29 Lesotho Highlands Water Project II underway The construction of a series of dams to benefit Lesotho and SA reaches its second phase. 30 Pump-as-turbine station considered a first This project is a marriage between civil, mechanical and electrical engineering disciplines.

08 The construction CEO who talks of people, not profits James Wilson, Amdec Group CEO says the country needs positive people. 10 Improve and evolve Construction World asks the CE of Corobrik, Dirk Meyer, 10 questions 12 First green certified building in Cameroon Douala Grand Mall, currently being built has been pre-certified as a green building. 22 Rebuilding Notre Dame Advanced technology is available to restore this 850-year old building to its former glory.

38 Equipment for the new world order Manitou’s new telehandler for emerging markets.

Construction JULY2019 PUBLICATIONS CR O WN COVERINGTHEWORLDOFCONSTRUCTION

WORLD

SCANIA’S NEWGENERATIONTRUCKS Asolutionaheadof its time

REGULARS

04 12 14 22 38 45

Marketplace

144 OxfordRoad AFLAGSHIP PROJECT

WESTERNCAPE’S innovativePUBLIC-PRIVATE URBANDEVELOPMENT

Environment & Sustainability

BESTPROJECTS2019: Entriesopen

Property

CW_July 2019_CoveFinal.indd 1

2019/06/18 12:18:43PM

ON THE COVER

Projects & Contracts

The construction industry is facing increasing demands for sustainable and cost-effective production. Enter Scania’s New Generation trucks. With the powerful line-up, Scania’s new generation trucks are ready for the toughest construction tasks and well prepared to meet the highly diverse transport needs of this sector. Simply put: Scania has the right products, the right services, and the right skills to help optimise the vehicle perfectly to the customers’ operation. In a time when margins are tight, such

Equipment

Products & Services

optimal solutions are vital. Read the story on page18

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COMMENT

The recent announcement by Stats SA that South Africa’s already flailing economy had shrunk by 3,2% in the first three months of the year, is beyond worrying for industry.

The 3,2% decline is the biggest quarterly fall in economic activity since the first quarter of 2009. Back then the global economic crisis could be blamed and the drop was spectacular – an entire 6,1%. Fast forward to 2019 and external factors played a lesser role in the 3,2% drop. This time it can be attributed to political uncertainty, the dire lack of government infrastructure spending and the lagging effect of the Zuma years. Analysts had predicted a drop in real GDP of around 1,9% but the actual drop sent shockwaves through an already worried industry. The downward prediction was based on depressed expenditure and investment in the economy, weak consumer demand, the negative impact of load shedding and recurring falls in mining production. When compared to the last quarter of 2018, almost all industries contracted in the first quarter of 2019: manufacturing fell by 8,8%, mining by 10,8%, agriculture by 13,2%, electricity by 6,9%, transport by 4,4%, trade by 3,6% and construction by 2,2%. Even though construction’s decline is less than that of the other industries, it continues a decline that started two years ago. It is not surprising that the RMB/BER Business Confidence Index, that was released soon after the shocking GDP figures, flatlined at a worryingly low of

28 in the second quarter. Seven out of 10 respondents are dissatisfied with current business conditions. In fact, the last time sentiment was so gloomy was in 2017 and before that after the global economic crisis in 2009. Apart from this low confidence on the back of deteriorating confidence in the five sectors measured by this index, output of the large business services sector also weakened. Therefore, the risk of another technical recession in the first half of 2019 is a reality. When announcing this Index, the Chief Economist at RMB, Ettienne le Roux, said that South Africa will not be able to shift to a lasting higher growth and prosperity path without more short-term pain. This time around South Africa cannot rely on the global economy to counterbalance such internal adjustment costs as global growth, in general, is cooling down. Enclaves of positivity Despite very challenging economic conditions in especially construction, two major players in South African construction are optimistic – in different ways. Amdec’s Group CEO, James Wilson recently said that there is a lot of pessimism around in SA right now. “It frustrates me because we have a great country and we need to talk it

up, but we keep talking it down. I’d suggest that we start developing optimistic habits,” he recently said in an interview with Lesley Stones (read the interview on page 8). A more pragmatic view is that of the Chief Executive of Corobrik, Dirk Meyer (page 10). In an interview I recently had with him he said that notwithstanding the difficulties in the current climate, he anticipates a slow and gradual recovery over the next 18 months. “After that it should accelerate. What will drive the economy and building industry is the 58 million people in the country. These people need shelter, whether through the formal or informal economy. This need will create demand for the building industry.” This quote certainly gives hope in a time when the construction industry (and all related industries) is in crisis.

Wilhem du Plessis Editor

@ConstWorldSA

www.facebook.com/construction-worldmagazinesa

EDITOR & DEPUTY PUBLISHER Wilhelm du Plessis constr@crown.co.za ADVERTISING MANAGER Erna Oosthuizen ernao@crown.co.za LAYOUT & GRAPHIC ARTIST Katlego Montsho CIRCULATION Karen Smith

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MARKETPLACE

CARBON TAX: LEGAL ASSESSMENT GUIDE FOR COMPANIES The much anticipated and long overdue Carbon Tax Act came into effect on 1 June 2019. This after president Cyril Ramaphosa signed the Carbon Tax Bill into law in May. By Ayanda Msimang, Associate at Shepstone & Wylie Attorneys

D uring the Minister of Finance’s budget speech in February 2019 it was announced that a carbon tax levy on fuel will be levied at 9c/ ℓ on petrol and 10 c/ℓ on diesel effective from 5 June 2019, a burden to be carried by both companies and consumers. The 1 st of June will mark the commencement of the first phase of the Carbon Tax Act, which will continue up until 31 December 2022. The second phase will commence thereafter which will start in 2023 and end in 2030. These phases have been aligned with South Africa’s National Determined Contributions targets to reduce greenhouse gas emissions, determined in accordance with the Paris Agreement. The goal is to reduce greenhouse gas emissions by at least 34% by 2020 and 42% by 2025. How will carbon tax work? According to the Act, any person that conducts an activity and emits greenhouse gas emissions (fuel combustion, industrial processes, and fugitive emissions) in the Republic above the prescribed threshold will be liable to carbon tax. However, the thresholds have mostly been set for the energy, manufacturing, construction and transportation sectors, this includes heat and electricity recovery from waste. But will exclude the Waste sector and Agriculture, Forest and other Land Use sectors. The initial marginal carbon tax rate on a taxpayer’s greenhouse gas emission has been set at R120 per ton carbon dioxide equivalent. However, due to South Africa’s struggling economy, the carbon tax will range between R6 – R48 per ton carbon dioxide equivalent during the implementation phase which is much lower than the initial rate of R120 per ton carbon dioxide equivalent. The implementation model is basically complemented by tax incentives and revenue recycling measures to allow a smooth business transition with minimal economic impact. The Act creates the following allowances: basic tax-free allowance, fugitive emissions allowance, trade exposure allowance, performance allowance, carbon-budget allowance and offsets allowance. Thus, during the implementation phases the total tax-free allowance could reach a high of up to 95 per cent. Does carbon tax apply to my company? In order to have a holistic understanding of the Act’s legal and fiscal

implication, it is suggested that companies should perform their assessments in the following manner:

Step one – Applicability Companies must first determine whether the Act actually applies to their operations. Thereafter, it is imperative for companies to establish the practical implications of the Carbon Tax Act or the effect of the Act on a company’s business operations. Ideally, this step should be a detailed legal synopsis or opinion on the implications of the Act and a preliminary assessment of the Act’s actual applicability to a company’s operation. If the Act actually applies to a company, based on the preliminary assessment, the company should then proceed to the following subsequent steps which relate to establishing the fiscal or financial Companies should determine and establish how much carbon tax will be levied in respect of the companies’ total greenhouse gas emissions. This aspect will require someone with technical knowledge who will calculate the amount of carbon tax to be levied from a company. Step Three – Financial Ramifications Once a company has established that the Act applies to its operations and how much carbon tax will be levied from such company, the company should then proceed with seeking a broader understanding of the Act’s fiscal or financial implication. In essence, the company will then require someone with tax, One of the reasons for this step is that carbon tax will be collected by the South African Revenue Services and administered through the Customs and Excise Act, 1964. As the commencement date draws closer and closer, it is recommended that companies should seek expert advice on the consequences of the Act to avoid unwarranted confusion when the Act actually kicks in and to attain proper understanding of the relevant regulatory requirements.  implication of the Act. Step Two – Quantum customs and commercial expertise to conduct a holistic financial assessment of the company’s financial position as far as the impacts of carbon tax are concerned.

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Kgampi Bapela, Regional Manager at IDC, Kate Machaba and Matshela Maloka.

CLAIMING THEIR SPACE IN THE ASPHALT INDUSTRY

For Kate Machaba, the dream of owning and running her own asphalt company came just 24 months after she qualified and started working in the civil engineering space. Machaba kick-started the journey of researching the business as far back as 2008 before putting it into traction with her now business

partner and fellow civil engineer, Matshela Maloka. T heir brain child, Maloka Machaba Surfacing (MM Surfacing), the largest 100% black youth-owned hot mix asphalt manufacturing company in Limpopo, was recently launched. This one stop surfacing outfit not only manufactures hot mix asphalt, but also does placement, different surface seals and has an onsite logistics offering. The fact that MM Surfacing is associated with a fully-fledged South African National Accreditation System (SANAS) approved lab, Mocha Lab, onsite for quality control and assurance, ensures that they can deliver at a quick turnaround to their clients, saving them time and money. “After almost eight years of doing our research, we officially started the process of starting up our company in 2016 with our application for funding being approved by the Industrial Development Corporation (IDC). The process to get our required operating licences took another 24 months resulting in us fully commissioning our plant at the end of October in 2018,” says Kate Machaba, co-owner and Technical Director at MM Surfacing. “Today is a great day for us as it has been long in the making. We are proud of our achievement and wish to thank the IDC for partnering with us and continuing to support us on this journey,” adds Matshela Maloka who co-owns MM Surfacing. MM Surfacing boasts one of the few technologically advance, fully automated plants in the country. This closed plant not only

offers clients efficient service with its batch plant operation, but is also environmentally friendly as close to 99% of emissions are kept within the plant, limiting air pollution. The plant’s batch system enables it to run different mixes at the same time giving the company the ability to simultaneously service multiple client orders. “We are proud of being the only company in the province that has a fully automated batch plant. As opposed to other companies in our space who operate continuous drum plants, we are able to deliver quicker and faster to our clients,” says Machaba. “MM Surfacing is one of those companies that represent all the elements that the IDC looks for in a potential client. Not only are they female owned, but they also are youth making serious inroads as black industrialists,” says the IDC’s Limpopo Regional Manager Kgampi Bapela. For Machaba and Maloka, the future is about expanding MM Surfacing’s offering by looking into other products. With most of their client base lying in Limpopo and a few other provinces in the country, MM Surfacing is gearing up to expanding their reach. “We are looking at making inroads into the rest of Africa and are ready to take up opportunities outside of the country. With our technologically advance plant and our logistics company, we are looking at exporting other products as well. We can only grow from this point,” adds Machaba. 

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MARKETPLACE

The way AfriSam complies with the new carbon tax is aimed at encouraging the appropriate behaviour of consumers.

ENCOURAGING APPROPRIATE BEHAVIOUR With South Africa’s carbon tax in force from 1 June this year, AfriSam is providing customers with transparent pricing and the ability to make greener choices.

A ccording to Richard Tomes, Sales and Marketing Executive at AfriSam, the way the company complies with the new carbon tax is aimed at encouraging the appropriate behaviour of consumers. Rather than apply a blanket price increase, AfriSam is allocating the amount of carbon tax due on each bag of cement. The carbon tax is a levy that varies according to the amount of carbon emitted in the manufacture of a product. The different cement brands in AfriSam’s range contain varying amounts of clinker – the most energy-consuming element of cement. This means that the carbon footprints of the brands differ from each other. “We are taking a transparent and responsible approach to the new tax,” says Tomes. “By showing the amount of carbon tax payable on

each specific bag of cement, our customers will still see the base price that we are charging. This avoids any confusion about how much of the final price is going toward the tax.” He notes that this approach will also make it easier for customers to identify the AfriSam cement brands with lower carbon footprints. “We believe that a tax should not just be a punitive tool, but it should also affect behaviour in society,” he says. “Just as cement producers are working hard to reduce carbon emissions, so the end- user can also play their part by choosing an environmentally-friendly brand.” While certain specialist cements demand higher clinker content, he says AfriSam increasingly uses extenders to create high- quality cement brands with lower environmental impact. 

CONSIDER MEDIATION TO SAVE TIME AND MONEY IN RESOLVING DISPUTES It is possible to resolve million-rand disputes, saving time and energy, without incurring excessive legal costs. Through mediation, it is even possible to achieve this and retain a beneficial commercial relationship with the counterparty. Barry Herholdt, Associate: MDA Construction and Technology Attorneys M ediation is most successful when executed using the right approach, techniques and procedure to ensure a good settlement between the parties, but most importantly, to achieve an outcome that satisfies both parties. relationships over the long term. Mediation includes the effective implementation of a favourable settlement outcome, which can be easily achieved when the process is steered by an experienced and well-trained mediator. More importantly, mediation requires both disputing parties to be willing and open to seeking a settlement or resolution. The fact that all parties involved can be

This requires a well-educated, knowledgeable and trained driver – the mediator. His or her knowledge of mediation techniques and procedures and how they’re best applied plays a crucial role. In Commercial Mediation: A User’s Guide , a South Gauteng High Court matter, MB versus NB is discussed, which recognises that mediation can produce remarkable results in the most unfavourable of circumstances, especially when conducted by one of the several hundred people in this country who have been trained in the mediation process. A major advantage of mediation is that it can save costs, compared to other dispute resolution procedures contained in standard form construction contracts like adjudication, arbitration or court litigation. A second advantage is that resolution of a dispute can be achieved in less time. Mediation is designed and envisaged to be a speedy process compared to other available dispute procedures because mediators work to encourage the parties to seek solutions, each side is also more likely to be able to address their own interests and needs, including reputation management. In typically adversarial litigation proceedings, the parties do not focus on finding a workable solution. Mediation can protect business relationships and minimise deteriorating relationships between parties. In fact, it can even strengthen and grow existing

bound by strict confidentiality, creates a safe environment and encourages the parties to make full and honest disclosures. All in all, mediation is an attractive dispute resolution mechanism when well applied. A quote from Commercial Mediation aptly sums it up: “The success of the process lies in its very nature. Unlike settlement negotiations between legal advisors, in themselves frequently fruitful, the process is conducted by an independent expert who can, under conditions of the strictest confidentiality, isolate underlying interest, use the information to identify common ground and,

by drawing on his or her own legal and other knowledge, sensitively encourage an evaluation of the prospects of success in the litigation and an appreciation of the costs and practical consequences of continued litigation, particularly if the case is a loser.” 

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MARKETPLACE

THE CONSTRUCTION CEOWHO TALKS OF PEOPLE, NOT PROFITS

Among the images of forklift trucks and office décor in a slideshow to celebrate the opening of a new mixed-use development in Cape Town, came pictures of inspirational quotes and exhortations to think positive thoughts. By Lesley Stones

by investors including the PIC, and while rivals are contracting or imploding, it’s already busy on an even more ambitious project called Harbour Arch, a R15-billion investment in Cape Town similar to its Melrose Arch property in Johannesburg. In total it has 5 000 residential units and 5 000 retirement homes under construction or planned, creating thousands of construction jobs. Often the people who are most optimistic about South Africa are those who live here by choice, rather than by birth. Wilson (51), moved here with his parents when he was 16, and runs Amdec with his father John, the Group’s chairman. “I understand why people are frustrated about the issues of the day, like crime and security and government corruption and the lack of service delivery, and I really do appreciate those frustrations. They frustrate me too, but having lived in a different country and being exposed to two ways of living my life, I choose to live here,” he said. “I also think I can do more for society living here than I can do living in the UK. There’s not a lot I could do in the UK to change people’s lives, but there’s a lot I can do here to change people’s lives and that’s part of the reason I’m

James Wilson,

the CEO of the Amdec Group.

A mdec Group CEO James Wilson talked about the swanky new Yacht Club, then asked his audience to smile more often, be thoughtful and forgive people, find their true purpose in life and look for the positive in negative situations. “Positive things happen to positive people. Find what it is in life that motivates you and follow it and be positive about this country, please,” Wilson urged. It wasn’t what you expect from a property launch, but it’s an attention-grabbing detour. “There is a lot of pessimism around in SA right now and it frustrates me because we have a great country and we need to talk it up, but we keep talking it down,” he added. “I’d suggest to each of you that we start developing optimistic habits. Be inspiring, so people will be inspired by what you do.” It’s easy to be optimistic when you are wealthy, the man next to me quipped quietly, and I put that excellent point to Wilson when we chatted later. “It’s also very easy when you’ve had some level of success and built a fairly large business to relocate your wealth to other parts of the world,” he said. “It’s just as easy to be negative and relocate yourself elsewhere, so it’s become a theme of my public speaking now to try and talk people up about the future of this country.” It’s a clever tactic, making you warm to him, and by extension, his company, as he speaks of a genuine desire to build communities that people aspire to be part of, rather than just building to make big profits. It’s an attitude that might help privately-owned Amdec survive the destruction currently wrecking the construction industry. Group Five entered business rescue in March after a loss of R1,31-billion in the year to June 2018, and Murray & Roberts took the peremptory step of selling its local building divisions in 2016. The Amdec Group is funded by profits from previous projects and

optimistic about the country.” In a recent article in The Daily Maverick , former Cape Town Mayor Patricia de Lille accused conservative members of the city caucus of mobilising rich ratepayers, environmentalists, and heritage and planning regulations to prevent the development of public spaces for public good. Instead, they have left Clifton, the city centre, Woodstock, Salt River, Hout Bay, Rondebosch and Plumstead “still fundamentally constructed on apartheid lines.” Yet Amdec’s new R1,5-billion Yacht Club with apartments costing upwards of R2,8-million seems to widen the social divide, even though Wilson cites improving the lives of poorer people as one of his goals. It’s an interesting debate, he says, because a company needs deep financial resources to be able to contribute to impoverished communities. “It’s very difficult to deliver low-cost housing if you don’t have a balance sheet to be able to do it. You need to allow businesses to thrive in their core discipline, and you need to create public-private partnerships where you can encourage successful businesses like our own to participate in social upliftment programmes,” he says. “We support the spatial planning notion that people of all racial communities and all wealth backgrounds should be able to live together, but you need to be a little bit more pragmatic that you are not going to be able to develop something in the V&A Waterfront that’s affordable to communities with limited wealth. But it could be in Salt River or Woodstock or parts of Cape Town CBD, where there are pieces of land which are less desirable for upmarket housing but are perfectly acceptable for more economically aspirant purchasers or tenants.” The Amdec Group has a division that focuses on inclusionary

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housing, building cheaper homes near the transport, leisure and retail facilities needed to create a community. One of its successes is 120 End Street in New Doornfontein, Johannesburg, where 1 500 affordable rental homes now house 6 000 residents. Amdec improved the whole area by regenerating a park, persuading the Passenger Rail Agency of South Africa (Prasa) to reopen a railway station, working with taxi associations to tidy up the ranks, stocking the local library with toys as well as books, and encouraging Shoprite Checkers to open a branch in Joburg CBD for the first time in 20 years. It total, it redeveloped 15 buildings, including a school. “We completely turned it around from a neighbourhood which frankly was quite dangerous and unpleasant to one where young kids are playing in the park and I personally felt very safe walking around in a suit,” Wilson says. A key failure point with low-cost houses is that they are often built miles from transport hubs, shops, schools, churches and all the other

facilities a community needs to prosper. “You have to take a holistic approach,” he says. “We conceptualise schemes which have all of those amenities close at hand, so you create environments where parents can drop their kids off at a local school, where they have easy walking access to transport, and where they can shop before and after work.” Wilson is keen to develop similar areas in Cape Town, starting with a project in Ottery where it will build 1 000 lower-cost homes. It’s also working with the provincial and local authorities to identify old industrial sites that could be demolished and redeveloped as residential areas. “There is very little profit incentive in it,” Wilson says. “It’s more a commitment to doing the right thing in the country, and that’s why it’s so important that you are able to make money in other projects so you can contribute to less profitable projects for the benefit of society.” 

Reinstatement of STAKEHOLDER ENGAGEMENT

Industry body, Consulting Engineers South Africa (CESA) congratulates Cyril Ramaphosa on his inauguration as President of South Africa. In keeping with President Ramaphosa’s call for a ‘New Dawn’ CESA would like to see the reinstatement of Stakeholder Engagement processes aimed at creating a transparent environment setting the stage for economic growth that is underpinned by investment in infrastructure development resulting in improved service delivery.

S peaking from his office in Johannesburg, Chris Campbell, CEO of CESA states, “It is imperative that we develop trust between the public and private sectors in order for our country to gear up for the demands of future growth. In order to be prepared for this growth professional service providers need to be able to plan and ensure that they can adequately respond to the needs for improved service delivery. This will require Government to provide sight of the country’s infrastructure development pipeline through increased stakeholder engagement.” He went on to state that if Government’s infrastructure rollout plans are shared early enough this will allow professional service providers to adequately prepare and ensure that they have enough capacity to handle the demand. This will mitigate the impact of suddenly placing huge demands on the industry. Campbell went on to say that most, if not all, previous infrastructure development plans would most likely need to be re-evaluated based on the country not reaching the predicted economic growth targets coupled with the negative impact of the global economic turndown as well as the impact of current US/China trade war. “In order to be optimally effective such revised planning requires a strong partnership between Government, investors and professional service providers. Consistent with the ‘new dawn’ approach we need to work on implementing healthy processes in building relationships that make for good service delivery of infrastructure projects.” Unfortunately, public officials well-meaning in trying to do the right thing have been forced to become nervous of engaging for fear of being accused of over-disclosure and even corruption. Campbell feels that there needs to be a broad stakeholder engagement and not just engagement of a ‘select few’ based purely on personal relationships, “What we require is open

and fair consultation with tenders being awarded based on competency”. CESA and its member firms are eager to partner towards capacity building in the public sector. “In order to provide optimally designed infrastructure taking into account its full lifecycle costs we require knowledgeable and technically capable public sector clients,” concludes Campbell. 

Chris Campbell, CEO of CESA.

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MARKETPLACE

IMPROVE and EVOLVE Construction World asked the Chief Executive of Corobrik, Dirk Meyer, 10 questions about the business and its positioning in the South African construction industry. Read what he has to say about how vital business flexibility is in difficult economic times.

What is the unique selling point of Corobrik? The first is that Corobrik is a truly national business. We have a footprint across the country. Architects, builders and specifiers are increasingly working outside of their own areas and provinces. For example: buildings built in Cape Town are specified from Johannesburg while a school being built in Butterworth in the Eastern Cape is being specified from Pretoria. It is a case of wherever the specifier or decision maker is, they will know us and we will know them. They can deal with one company and do not have to deal with strangers. The second is that our product range’s quality is superior to others. This is a consequence of running ISO 9001, ISO 14000, ISO 18000 quality assurance programmes. There are holistic quality, health, safety and environment programmes in place. What gives Corobrik the edge over brands that offer similar products? As Corobrik sees itself as being in the walling and parts of the

flooring markets, we take a broad view of who our competitors are. The products and brands we compete against can be anything from glass, aluminium cladding, polyester or fibre cement cladding through to other bricks. If I narrow it down to bricks and blocks: all our products are available on a national basis. In addition, our consistent quality and service standards set us apart from the other brick makers. Describe Corobrik’s approach to marketing? Our marketing approach is focused around where the products will be used. Our FBX (Face Brick Extra) bricks are used when extremely high quality is a prerequisite. It is mainly used for non- residential applications in the private and public sectors) while our more affordable ranges of bricks (FBA or FBS) which can have various features, colours and sizes and are primarily used in residential developments. What are your strategic plans for Corobrik? My drive is for the business to stay relevant to the market by continuously evolving the product range, improving its quality standards and lowering operating costs – while at the same time improving product quality. From a commercial point of view, this is what makes us sustainable going forward. At the same time, the business focuses heavily on social and environmental sustainability. What makes Corobrik the leading brick maker in the country? Besides that already mentioned, what truly sets us apart is our focus on the technology that is used and the resources required. We have consistently invested in the business over many decades by upgrading existing facilities and building new plants. What is your role as Chief Executive and what have been your challenges and successes? The main challenge of any business leader in South Africa is charting their company through the current economy. I have been in the industry for more than 30 years and focus on where the market is going. My aim is to make sure the business is flexible to move with the direction the market is going. Corobrik is agile in the sense that we can move our product range up and down the market to wherever the opportunities are. At the moment it is in student accommodation and low cost housing and we can tailor our product ranges to focus on these markets. At the same time I have to make the business sustainable for the long term so that shareholders can reap the benefit. Whilst Corobrik is a private business, our staff trust holds 26% of shares. It is important for the business to grow over time, not only for the commercial shareholders, but also for the staff trust. In this trust every employee of Corobrik, who has had a year or more’s service, is a beneficiary. In your view, what is the medium to long-term outlook in the building industry in South Africa? The construction industry has been in recessionary conditions for the last two years – both civil and building. Notwithstanding the difficulties in the current climate, one would anticipate a slow

Chief Executive of Corobrik, Dirk Meyer.

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“Notwithstanding the difficulties in the current climate, one would anticipate a slow and gradual recovery over the next 18 months. After that it should accelerate. What will drive the economy and building industry are the 58 million people in the country. These people need shelter, whether through the formal or informal economy. This need will create demand for the building industry. and gradual recovery over the next 18 months. After that it should accelerate. What will drive the economy and building industry, are the 58 million people in the country. These people need shelter, whether through the formal or informal economy. This need will create demand for the building industry. What are the main motivations for the R801-million Driefontein factory? The design of the plant is such that it has huge flexibility to make different products, and of different sizes. This not only drives down costs and improves quality but gives us capacity for when the market starts growing again. What is Corobrik’s approach to social investment? The staff trust speaks for itself: it owns 26% of equity in Corobrik and is unencumbered by debt. This represents significant investment and foresight. Furthermore, Corobrik spends considerably in the areas around our quarries – we have built clinics, community halls, and schools, while we take on interns from the community and develop them through our factories. Those that show potential are escalated to our management training programme and they become production management or sales trainees. What is your approach to sustainable construction? The southern hemisphere has a high diurnal range. In the northern hemisphere the diurnal range is small which necessitates insulated buildings so they can stay cool in summer and warm in winter. In Africa, because of the high diurnal range, you want a wall that carries thermal mass and a building that is not too insulated. Masonry walls have high thermal mass. During the daytime the wall stores energy. Later the wall radiates energy back into the environment. From a sustainable point of view, you do not want a building that is incredibly well insulated as this won’t allow the benefit of say the high maximum temperature of a winter’s day. From an architecturally sustainable point of view you want a double skinned masonry wall which will give you the best thermal performance as the thermal battery of a masonry wall works well. Such walls are the best solution for our environment. This is based on empirical research and thermal modelling which proved the case of comfortable and optimal living conditions in buildings. We are ahead of the curve with this. Corobrik has done a full life cycle assessment of clay brick through the Clay Brick Association and was the first in South Africa to do such a cradle to grave assessment. 

HP: MAPEI

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ENVIRONMENT & SUSTAINABILITY

Decision SUPPORTED

The South African Wind Energy Association (SAWEA) has come out in support of the recent request by the Department of Energy for NERSA to licence businesses to generate power and feed it into the national grid.

T his commendable step by the Minister will contribute to further decentralisation and democratisation of the South African electricity sector. It will open the market to smaller-scale renewable energy projects with a significant level of local ownership. “The small-scale embedded generation (SSEG) market has the potential to support the industrialisation efforts stimulated by the Renewable Energy Independent Power Producer Procurement Programme (REI4P) and contribute to job creation,” says Ntombifuthi Ntuli, SAWEA Board Member and Research Group Leader: Energy Industry, CSIR Energy Centre. A recent SAWEA study that investigated the value proposition of distributed generation renewable energy estimated the job creation

potential for wind energy SSEG projects at 207 jobs during one year of construction and 127 permanent jobs during operations, for a combined capacity of 50MW projects. If the wind industry deploys 50MW per annum over a 10-year period, it can create 4 840 jobs. This is over and above the jobs created in the REI4P market segment. The study estimated that between 40 MW and 75 MW per annum could be generated from behind-the-meter grid-tied wind energy projects, while it estimated 135MW per annum for projects wheeling electricity from remote wind energy sites. This could plug the demand gaps created by the stop-start nature of the REI4P and create a certain level of continuity in the renewable energy market. 

Douala Grand Mall, Cameroon’s first destination retail mall, has been pre-certified to IFC – International Finance Corporation EDGE. Once construction is complete, it will be the first certified green building in Cameroon. FIRST GREEN CERTIFIED building in CAMEROON

D eveloped by Actis, a leading growth market investor and local partner Craft Development, Douala Grand Mall will comprise 18 000 m 2 of retail and leisure space, close to Bonapriso in Cameroon’s largest city. Occupying the most strategic site in Douala, the development is located in the immediate vicinity of the International Airport, with a catchment area of four million inhabitants and ready accessibility for all socio-economic groups. The mall will be 30% more energy efficient and 50% more water efficient than other buildings in the market, through measures such as using reflective paint and tiles on the roof; installing faucet aerators and water efficient bathroom fixtures. Through its real estate portfolio, Actis’ institutional commitment to ‘Green-by-Design’ has delivered an impressive track record across Africa, with a range of highly successful sustainable developments including: Garden City in Nairobi, which won Africa Property Investment’s Best Green Building in Sub-Saharan Africa in 2017. Actis and IFC are committed to moving the Cameroonian building

construction industry on to a lower carbon, more resource-efficient path and promoting green buildings and sustainable design practices. Funke Okubadejo, Director and Actis’ investment manager for the asset commented: “Douala Grand Mall completes a fourth ‘first’ for Actis, following Heritage Place, Lagos; One Airport Square, Accra and Garden City, Nairobi, which were the first Green certified buildings in their respective markets. The EDGE certification gives tangible meaning to environmentally friendly construction.” Ommid Saberi, IFC’s Senior Industry Specialist for Green Buildings and EDGE Global Technical Lead, added: “Actis is setting an example for others to follow in being the first to express their commitment to EDGE and encouraging green building growth. With the support of the financial sector and pioneers such as Actis who have embraced EDGE, together we can transform the future built environment across Africa.” Actis has a strong presence across Francophone Africa including energy, education and healthcare businesses. 

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PROPERTY

UPPING USA RETAIL PROPERTY PORTFOLIO

Emira Property Fund has made two further equity investments into grocery-anchored dominant shopping centres in the USA, both located in the state of Texas.

T his furthers Emira’s growing US investment strategy through which it has now assembled a portfolio of eight value-focused retail centre assets in thriving states of the world’s largest economy. Geoff Jennett, CEO of Emira, says: “Our latest acquisitions strengthen the value and quality of Emira’s equity in its US retail portfolio and take its value to USD61-million, or more than R850-million.” Emira’s US retail property exposure is now almost 6% of its total portfolio. This places Emira on track to achieve its goal of 8% of its total assets in the US by June 2019. The JSE-listed REIT co-invests in the US with its in-country partners, the Rainier Group of Companies. The seventh shopping centre to be included in its US portfolio is the 150 000 sqf San Antonio Crossing in Texas. The centre is 100% let and 88% occupied by national tenants and has a 7,6-year weighted average lease expiry (WALE). It is shadow-anchored by Texas-based grocery chain H-E-B Plus!. The shopping centre is well located at one of the busiest intersections in the high-growth area of San Antonio, which has a population of 1,5 million people, a diversified economy, and was the fastest growing city in the USA in 2016/17. San Antonio Crossing was acquired for USD24m at an 8,85% initial capitalisation rate. Emira’s equity investment totals USD4.15m at an 11,2% initial yield. The property transferred in February 2019. The eighth shopping centre acquired by Emira’s US partnership is Wheatland Towne Crossing in Dallas, Texas. The 206 000 sqf open- air, value-oriented centre is shadow-anchored by mega-retailer Target. It is 99% occupied and 90% let to national credit tenants. The centre has a WALE of 4,4 years.

Wheatland Towne Crossing is situated at a major highway interchange in

Dallas-Fort Worth, which is the fourth largest metropolitan area in the US, and the country’s largest inland metro.

The retail centre was acquired for USD32,2-million at an 8,67% initial capitalisation rate. Emira’s equity portion of the investment is USD6,3-million, made at an initial yield of 10,95%. The property transferred at the end of March 2019. “Both centres further our US investment strategy and are true to Emira’s criteria of investing in open-air, value-orientated retail centres with grocery stores as anchors or shadow-anchors,” notes Jennett. Emira is a medium-cap diversified REIT that is invested in a quality, balanced portfolio of office, retail, industrial and residential properties. At 31 December 2018, its directly held assets comprised 104 properties valued at R12,5-billion. It invests indirectly in 22 shopping centres valued at R1,04-billion through its exposure to Enyuka Property Fund. It also has a 34,9% holding in JSE AltX-listed Transcend Residential Property Fund. Emira is internationally diversified through its investment in ASX-listed Growthpoint Properties Australia valued at R941-million, and its equity investments in eight grocery-anchored open-air convenience shopping centres with a combined value of USD61-million through its USA subsidiary. 

THE FUTURE OF CO-WORKING SPACE IN SOUTH AFRICA The co-working space in South Africa has seen tremendous growth over the years since its inception in early 2000. From small entrepreneur start-ups to large international corporates, convenience and the desire for exciting worker-space experiences is what continues to drive demand.

A ndrew Utterson, Director of Heartwood Properties and ex-CEO of The Business Centre Group, estimates that the worldwide co-working floor space, as a percentage of all commercial floor space, will grow from the current level of around 1,5% to approximately 15% in the next 10 to 15 years. He predicts that co-working locations may also start appearing in vacant retail spaces as the move to online retailing accelerates. Utterson shares his insights into how the co-working space is evolving in South Africa and why it’s a sector worth investing in. If you want to be plugged into the future you need to be plugged into a co-working space. Convenience, mobility, flexibility, choice and a sense of community will continue to drive future workforces and millennials to demand co-working spaces. With technology forming the backbone of all these offerings, most co-working spaces will be made up of a combination of cubicles, open shared spaces and private offices. More of the larger property funds are also starting to take notice and are either testing the water or partnering with established

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New divisional DIRECTOR The dynamic Andile Rapiya has been appointed Divisional Director Group Marketing: Brand and Communications at Broll Property Group, a leading and proudly pan-African commercial property services company. Her appointment to the new role became effective as of April 2019.

operators to fill their vacant spaces. For example, Investec has partnered with FutureSpace (Giant Leap) and has multiple co- working sites in Sandton, while Growthpoint has partnered with Workshop 17 (Open) with a site at the V&A Waterfront and another at the Maboneng Precinct in JHB. Worker experience a major factor in distinguishing co-working spaces It’s the overall experience, multitude of services and sense of community co-working spaces offer that makes them more attractive. The ongoing deployment of managed new technologies, high speed internet and customer specific IT solutions make most co-working spaces more convenient for potential clients. Co-working spaces or serviced office businesses are hospitality- type businesses and have a similar service ethic to that of hotels. There is a massive emphasis on good customer service and a quality client experience. In comparison, buildings that offer 'shared spaces' and have no management of these spaces are essentially boxes for rent. Co-working influences how buildings are designed and built Co-workers are demanding a quality experience from their clean modern day working environments such as fashionable interiors with interesting or fun break away zones, hotel style reception and ablutions, excellent security, healthy food options, leading coffee brands, high speed internet and professional R apiya (38), who holds a B.Com Honours in Marketing from the University of KwaZulu-Natal (UKZN), joined Broll in 2017 as National Marketing Manager on the SA Corporate Real Estate Portfolio. Malcolm Horne, CEO of Broll Property Group comments: “Andile brings extensive marketing, branding and corporate affairs experience to her new role at Broll. Since joining Broll in 2017, she has made a positive impact on the company and we are pleased to announce her promotion to Divisional Director Group Marketing: Brand & Communications at Broll.” Commenting on her new role, Rapiya says: “I am delighted to have been appointed to head up this exciting position at Broll, which is a progressive leader in the commercial property services market in Sub-Saharan Africa and the Indian Ocean region. In this new role, I am looking forward to the opportunity to work with our various divisions to promote and position our brand in the various geographies we operate in across Africa.” Founded in 1975, Broll Property Group today has a presence in 16 countries across Sub-Saharan Africa and the Indian Ocean Islands, including South Africa, Botswana, Cameroon, Ghana, Ivory Coast, Kenya, Madagascar, Mauritius, Mozambique, Namibia, Nigeria, Reunion, Swaziland, Seychelles, Uganda and Zambia. Before joining Broll in 2017, Rapiya held marketing management positions at the Airports Company of South Africa (OR International Airport); The Pavilion Shopping Centre; East Coast Radio; and, PRIMEDIA Lifestyle. Prior to this, she worked at Disturbance Design; held a post as Corporate Social Investment Manager, Corporate Affairs at South African Breweries Limited; and, was a Junior Lecturer in the Faculty of Management Studies at UKZN.

Says Rapiya: “Since joining Broll in 2017, one of my greatest successes has been looking after the SA Corporate Real Estate Portfolio, for which Broll won 4 Footprint Awards in 2018. The Footprint Awards for shopping centre marketing is hosted by the South African Council of Shopping Centres (SACSC) annually, and is known as the industry’s top shopping centre marketing recognition initiative… Broll is a key player in the commercial property services industry, not just in South Africa but in several other countries across the continent as well as the Indian Ocean region. I want to take make my mark in taking Broll’s brand to the next level and am excited to work the Broll team to make this happen.” 

support staff. More and more new buildings are being designed with the potential to host a successful co-working operator should the opportunity arise, including shopping malls. Vacant retail space is ideal for accommodating co-working With so many of the bigger retailers not requiring the massive floor space thanks to online shopping, many retail spaces are standing empty. Retail spaces want customers with money in their pockets walking around their centres and co-working clients fit this profile perfectly. They are normally higher LSM types who will spend money in restaurants and shops. I’d expect most new retail centres to be making design plans to accommodate co-working as part of their tenant mix. Retail centres also normally have ample parking which is a big plus for co-working. Conclusion There are currently over 100 co-working locations across South Africa and approximately 14 000 sites worldwide with this number likely to grow to over 21 000 sites by 2022. And it’s not only market leaders who will lead this growth, smaller co-working providers will also find a sizeable space in the market with big organisations slow to change and not able to fill niche markets. This means co-working is here to stay. And it’s going to influence more than just the way we work and interact with each other but ultimately see building design and construction evolve in order to meet this growing sector. 

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