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Valuers' Newsletter Issue 10
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   #10 issue: Tuesday 01 August 2017  

Herewith your next Valuers’ Newsletter issued by the SAIV.


Why the 'cost per square metre rate' should be used with caution

Clients and contractors involved in the cost comparison and cost planning process in expressing building cost should use the 'cost per square metre rate' with extreme caution, advises Bert van den Heever, former president of the Association of South African Quantity Surveyors (ASAQS).

There are a number of design variables which can adversely influence square metre rates, thereby giving a false impression of the cost of a building project and this can lead to serious problems for both clients and contractors, he says. “You will not compare a Porsche to a Volkswagen on the basis of their cost per square metre, so why try and do it with buildings?” 

“As a client, a generic cost per square metre rate doesn’t give you the detailed information that you need regarding finishes, fittings, services, site development costs, etc. There is a wide range of other building elements that also have an impact on costs and therefore quantity surveyors normally do elemental estimates to derive the square metre cost of a project. 

“An elemental estimate provides cost build-ups for elements such as the substructure, ground floor, external façade, roofs etc., and enables the quantity surveyor to advise the client on aspects of cost at a very early stage,” says Van den Heever.




The World’s Largest Floating Solar Energy Farm is Finally Online

China, which was one of the worst offenders in the area of carbon emissions, is now a world leader in the adoption of renewables. China is on the way to becoming “green superpower.”

Now the world’s largest floating solar plant in the South Anhui Province of China is finally online and generating renewable energy. This 40MW plant was created by PV inverter manufacturer Sungrow Power Supply Co. Many other similarly-sized projects are cropping up all over China.

This solar power plant is located in an appropriate setting. It’s based in an area which was once a coal-mining town. But now the area is flooded due to rainy weather. In certain areas, water is four to ten meters deep.

Since the area was previously used for coal mining operations, the water there is mineralized and mostly useless. With this floating solar plant, the useless water and land are put to good use. Moreover, the water naturally cools the system, which helps in improving power generation and preventing long-term damage from heat.






What Does the Future of Smart Homes Look Like?

Future homes will have an abundance of “smart” technology that adapts to your lifestyle and preferences. Striving toward a perfect personalized comfort, smart homes are becoming more popular and widespread. The future of smart homes offers a variety of exciting features, ranging from smart thermostats and window shading to real-time monitoring of energy consumption and garage door usage.

Some features of smart homes that appear to be here to stay include:

Smart Thermostats
Thermostats do an excellent job of maintaining a set temperature. Still, our bodies rarely prefer one temperature at all times. Sometimes we’re too hot or cold. Anything from an illness to overindulging in food can cause our body temperature to fluctuate.

Imagine if future smart home innovation could use our own body temperature to work with smart thermostats for a home’s optimal temperature. Wearables may have the potential to detect a person’s body temperature and use that information to set the temperature. Smart thermostats like the Ecobee4 can figure out if you’re home with a remote sensor, which can save energy if you leave for the weekend and forget to set the thermostat.




Bridge City's bold affordable housing vision becomes reality 

Construction of a landmark affordable housing project at Bridge City is due to start within weeks, marking another step toward realising the development’s bold vision.
A joint venture between Tongaat Hulett and eThekwini Municipality, Bridge City is positioned as a mixed-use precinct able to cater to a broad range of constituents.

With 356 affordable apartment units to be offered from as little as R499 000, these residential units are crucial to helping the partnership realise its vision of providing quality, affordable urban homes in a new town centre replacing a previously underdeveloped strip. These units will be built by nationally renowned, JSE-listed; Calgro M3, which has purchased the land for development in conjunction with affordable home loan provider; Chartwell Group.

Located less than 20 kilometres north of Durban’s CBD, Bridge City is bordered by Phoenix, Inanda, Ntuzuma and KwaMashu, collectively accommodating over 600 000 people. These new affordable homes are therefore a further important piece of the Bridge City development puzzle, which includes the 13-hectare Bridge City Business Estate and a Town Centre consisting of commercial, retail, residential, state hospital and regional magistrate’s court sites. The opening of eThekwini’s Go!Durban Integrated Rapid Public Transport Network (IRPTN) public transport system and the installation of CCTV security throughout Bridge City by the end of the year, will make Bridge City a highly desirable commercial and residential node.






Processes required when considering any renovations or alterations in sectional title schemes

There are often cases, particularly in older sectional title blocks, where units will need modernising or upgrading in some way or another. 

This will usually be addressed when a unit is sold and the buyer decides to make changes to suit his own tastes and living requirements. 

What all sectional title owners must realise (and often don’t) is that permission for any renovation or alteration - whether to a primary section, utility room, garage or staff room - is required before any work is undertaken, says Michael Bauer, general manager of property management company IHFM.

When applying to the trustees of the body corporate for permission, the owner of the unit must include a motivation letter as to why the renovation is necessary, a full description of what is to be altered or renovated, how long it will take to complete, plans and architectural drawings with an engineer’s report if there are to be any structural changes, and proof of funding and building deposit for the project. The trustees will check whether the contractor has the correct insurance to cover any damage on site and they might need to change the scheme’s risk cover for the duration of the renovation or alteration project.




Substantial development for Salt River's Brickfield Road

Pockets of Salt River, once a booming part of Cape Town due to its proximity to the CBD, have been revitalised under property developers whose foresight envisioned the creation of a contemporary place to live, work and play.

Bordering Woodstock, the area is part of a R20 billion urban renewal initiative across Cape Town. The Salt River urban renewal integrates several related projects that aim to increase and upgrade the current available space – from the renovation of industrial buildings and the upgrading of sidewalks to the creation of a community playpark and art installations.

Dawie Swart from Investicore acquired 13 Brickfield Rd in May 2015 and together with Construct Capital, a Property Finance and Development company, have redeveloped it into a mixed commercial and retail space housing Deckle Edge, Bootleggers and the Woodstock Bakery, among a mix of creative businesses.

 “I aim to create an environment that can accommodate an eclectic mix of businesses to serve the area. From a chef’s academy, art supply store and restaurants to innovative tech companies and other creative industries,” says Swart. He has already successfully redeveloped an old textile building at 97 Durham Avenue, now the home to Red and Yellow advertising school, Zando, The Creamery, Get Wine and Devils Peak Taproom to name a few.






Ongoing subdued household credit and mortgage balances growth 

The value of outstanding credit balances in the South African household sector increased by 2,8% year-on-year (y/y) to a level of R1 508,2 billion in the first five months of 2017, which was the combined result of continued low growth of 2,3% y/y in secured credit balances and growth of 4,6% y/y in unsecured credit balances over this period.
Household secured credit balances (R1 155,3 billion and 76,6 % of total household credit balances) increased by 2,3% y/y up to the end of May, unchanged from end-March and endApril, but down from 3,7 % y/y at end-May last year. The unabated low year-on-year growth in secured credit balances was the result of continued subdued growth in household mortgage balances (see below), while instalment sales balances (21,5% of total household secured balances and mainly related to vehicle finance) showed no growth on a year-on-year basis in the 5-month period up to end-May.  

Growth in household unsecured credit balances (R352,8 billion and 23,4% of total household credit balances) came to  4,6% y/y in the period January to May this year. The component of general loans and advances balances (58,5% of total household unsecured credit balances and largely consisting of personal loans and micro finance) increased by 5,3 % y/y by end-May.  




Newly opened Atterbury development Kumasi City Mall is already trading strongly

The USD95 million Kumasi City Mall developed by leading South African property development and investment company Atterbury has opened to become Atterbury’s fourth retail development in Ghana.
Atterbury’s other successful developments in the country are all in Ghana’s capital, Accra and include Accra Mall, West Hills Mall, and Achimota Retail Centre.

Atterbury developed Kumasi City Mall for its owners, Delico Kumasi Limited and AttAfrica has been appointed as the Asset Manager, responsible for its day-to-day running and operations.

Kumasi City Mall is the first and only mall in the entire northern sector of the country. It took 24 months to deliver the completed development to the city of Kumasi, the Ashanti region, capital Ghana’s second largest metropolitan centre after Accra. Kumasi is acknowledged as the hub of Ghanaian tradition and culture.

Now, the world-class 18,500sqm modern Kumasi City Mall has given the city its first one-stop shopping and entertainment environment under one roof. It is built on a total land area of over 15 acres and has the potential to expand up to 28,000sqm.







Property sector welcomes rate cut, calls for leadership to 'get its house in order'

South African Reserve Bank governor Lesetja Kganyago, on Thursday, 20 July, announced the bank's decision to reduce the repo rate by 25 basis points, cutting the repo rate from 7% to 6.75%. The unexpected 0.25% rate cut has been welcomed by the property sector.

Said Herschel Jawitz, CEO of Jawitz Properties, following the announcement: "Not only will the cut have an impact on affordability for home buyers and offer homeowners some respite in terms of their disposable income but, more importantly, consumers may start to feel more confident about the direction of the economy."

A renewed confidence in South Africa's economy will allow consumers to make more longer-term spending decisions, he said, of which buying a home is one of the biggest. Consumers will see a R160 decrease in monthly repayments for every million rand on a 20-year mortgage at the new prime rate of 10.25%, he explained.

Positive signal to the market

Dr Andrew Golding, chief executive of the Pam Golding Property group, has also welcomed the announcement, saying it's encouraging news for potential home buyers: “Consumers could use some positive news right now and this downward shift, albeit only a quarter of a percent, is important as it sends a positive signal to the market and hopefully heralds the start of a downward shift in the interest rate cycle."




Best Regards

Melanie Vallun
General Secretary 
South African Institute of Valuers
(086) 100 SAIV


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