CBS Chazen South Africa 4.0

The last two days in Capetown were filled with memorable moments, great people, and we all wish they lasted a bit longer. We toured the V&A Waterfront with members from the Green Building Council, discussed sustainability with Allan Gray Investment Management, visited a local development firm, hiked a 3,600-ft peak, enjoyed wine tastings in Constantia & Steenberg and took plenty of advantage of the coastal night life.

Firstly, our group received a presentation of the V&A waterfront from Colin Devenish, Executive Manager of Operations and a member of the Green Building Council. The Victoria & Alfred (V&A) waterfront is a mixed-use complex located on the Atlantic Shore, in Table Bay Harbor. Designed in the late 19th century, the complex is situated in South Africa’s oldest working harbor and comprises over 300 acres developed for both residential and commercial use. In light of the size and high utilization rate (over 23 million of annual visitors), we were pleased to learn the steps that management has been taking to reduce its footprint since 2008. To-date, the waterfront has invested R45 Million into energy efficiency, water savings and waste recycling across the 300-acre property, as well as introduced a number of other greening initiatives across the area. Efforts such as these have allowed the waterfront to nearly halve its waste going to landfills, significantly reduce electricity and water consumption and increased recycling and lower carbon emissions due to increased use of bicycles and public transportation.

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On the note of sustainability, our group had the pleasure of touring the headquarters of Allan Gray with Michael Smith, Department Head of Infrastructure and Security at the company. Headquartered in Silo One at the V&A Waterfront, Allan Gray’s office was built in 2014 and achieved the first ever six-star green rating in South Africa. We were delighted to hear that the modern building incorporates features such as high-performance, fully-glazed, double skin glass façade to optimize the use of natural lighting and advanced cooling system that rely on cold Atlantic seawater. Furthermore, the heat from the IT server room provides floor heating in the reception area while waste water from hand wash basins and showers is collected, treated within the grey water system, and reused for flushing water. A beautiful anchor to the waterfront, this visionary project has stunning views of Cape Town and of the surrounding harbor.

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Having witnessed the remarkable success of the Allan Gray headquarters development at V&A, our team headed to Devmark Property Group, a development firm in the Western Cape specializing in mixed-use projects across all asset classes. The firm owns all aspects of the development process from land acquisition to entitlement, development, construction and marketing. The firm’s pipeline encompasses investments such as a 1,000-unit integrated housing project, 111 luxury home and 54 assisted living facilities as well as a full-scale R3bn retail development in the Western Cape. Playing off its 30-year old local advantage, Devmark analyzes opportunities in the region with an eye toward demographic trends in urbanization and capital migration.

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Last, but not least, we had a lot of fun in Cape Town. Hiking up Table Mountain at 7 AM after a night of successive pub crawls gave each of us the opportunity to test our limits physically while enjoying the pristine views of the Cape Town skyline. Fittingly, our trip concluded driving along the coast right before the dawn. We stopped the bus to watch the sunset, gathered around, reminisced the memorable times we had had over the past few days and celebrated being in the moment with yet another standing ovation to Africa, a land of stunning natural beauty and fascination for all things (not just Real Estate). Good bye, South Africa and see you soon!DJI_0010.jpg

CBS Chazen South Africa 3.0 (Good Bye Jo’Burg, Hello Cape Town)

Our last day in Johannesburg represented an opportunity to hear a practitioner’s perspective on capital flows and the strength of the South African mortgage market as well as get in on a very interesting student housing project in the center of Johannesburg. Our team heard from Manie Annandale, Nedbank head of Affordable Housing Finance who was gracious with his time and provided a brief review of the banking regulatory environment, current players in the marketplace and opportunities for growth. After the Nedbank tour, we headed to the Braamfontein area of Johannesburg where IHS owns and manages Studentdigz, a 948-unit portfolio of student housing projects with access to University of Johannesburg and Witts University.

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When the Studentdigz tour concluded, our bus headed to the airport where we hopped on a 3 hour-long flight to Cape Town and the excitement of getting to discover another city in this wonderful country. The same night, we dined at Sevruga on the V&A waterfront, one of the premier coastal destinations in the world that we toured the following day (& discussed at length in our next article). It had only been a few days in South Africa for all of us, but we were each feeling very much invested in trying to find solutions to the problems of housing affordability we noted.

CBS Chazen South Africa 2.0

Our 2nd day in Johannesburg started with a visit to the Apartheid Museum, which provided all of us with a way to better understand and experience what apartheid South Africa was really like. Through the help of the museum’s various individual exhibits, we were drawn into an emotional journey of the now defunct state-sanctioned racial segregation system and the struggle of the majority to overthrow this injustice. Carefully assembled in chronological order, the exhibits showed a clear depiction of the rise and fall of apartheid, from the race classification journeys, the turn to violence, through the rise of black consciousness which culminated in the National Peace Accord and the historic 1994 elections which represented one of the few times a colonizing force had relinquished control without large scale external intervention or civil war.

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Touring the museum was such an emotional journey through horrors, injustice, sacrifice, liberation and healing that we could not help but note the harsh beauty of this country and how remarkable its progress has been in spite of staggering odds. We left the museum and headed to Sakhumzi restaurant for an authentic culinary experience in the heart of Soweto and within walking distance to the Nelson Mandela house museum.

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In the afternoon, we toured Jabulani, a 1,000-unit multifamily housing project owned and managed by International Housing Solutions (IHS), a South-Africa based vertically-integrated Real Estate investment management firm. Located in Soweto, the Jabulani project caters to the housing needs of middle-income individuals looking to live in close proximity to major transportation and employment centers. Accompanied by the IHS staff, we concluded the Jabulani tour and headed to Fleurhof, a 10,000-apartment commercial and residential development community west of Johannesburg in the Roodeport province.  Constructed in multiple phases, Fleurhof is expected to house over 40,000 residents when completed. The sheer size of this project is astounding and the completed phases are near 100% occupied, proving the exceptional growth of the emerging middle class in South Africa. Further, this project will include improved community infrastructure, easy access to schools, hospitals, shops and work opportunities, improving the livelihood of its residents.

We left Fleurhof inspired by IHS’ efforts to address the lack of housing affordability in the emerging South African middle class. Having been in the country for a little over 3 days, we realized that we were merely scratching the surface examining the size of the opportunity set. We concluded the evening with a walk at Melrose Arch, a modern mixed-use development in Central Johannessburg where our group dined at Moyo, a local favorite (if you are in town and up for a culinary adventure, you must try the mabosa caterpillar).

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It’s time for South Africa

Africa is where it all began and in Real Estate, the best way to know is it to become one with it, to explore the vastness of the continent and witness its story. Our school prides itself on being at the very center of business and upholding the highest standards of intellectual pursuit and cultural enrichment. When it came time to act upon this mission, we decided to look no further than South Africa, a bustling democracy 24 years in the making where changes in land use patterns, demographics and workforce automation are beginning to drive significant growth in the real estate market.

On March 13th, 36 students aimed to get to the bottom of all things Real Estate while embarking upon this journey. We started our trek in Johannesburg with a visit to Growthpoint Properties, an international Real Estate fund investing in industrial, retail and office assets in South Africa, where the firm’s management introduced us to broad investment strategies undertaken in the current market environment.

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Shortly afterwards, we visited Lillieslief Farm, the place secretly used by African National Congress (ANC) activists in the 1960s and where many prominent ANC leaders were arrested (Mandela was later arrested here, beginning his 27-year long imprisonment). It was there we received an overview on the current state of affairs in South Africa from JP Landsman, a political and economic analyst research macro trends affecting SA society and also heard from a treasury representative on the country’s fiscal situation. The presentations concluded with a presentation from Kecia Rust, director at the Centre for Affordable Housing Finance, a government think-tank examining housing affordability in South Africa. In the evening, our group had the pleasure of meeting with members of the South African Property Owners Association (SAPOA) where we heard from local Real Estate investors. Off to Day 2 and more adventures along the way.

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The Other Middle Eastern Oil Export: Discovering Tunisian Olive Oil

Moulins Mahjoub 1.jpgEarly in the fall, my study group for Global Immersion: Doing Business in North Africa made the somewhat serendipitous decision to study the Tunisian olive oil industry for our term project. We made this choice with little information — other than that olive oil is Tunisia’s largest export and that the industry is the country’s largest employer — but I couldn’t be happier that we got to spend the trip taking a deeper look at olive oil.

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On Wednesday, we spent the day at Les Moulins Mahjoub, a 70-year-old, family-owned olive oil producer about an hour outside of Tunis. Despite being a relatively small producer of 200,000 liters per year with no intention of increasing its outputs, there’s a good chance you’ve tried Les Moulins Mahjoub’s products, available in the U.S. at Whole Foods and as the house brand at Le Pain Quotidien. Now in its third generation, the business is co-owned by three brothers and seven sisters. One of the brothers, Abdel-Majid Mahjoub, who serves as the general manager, gave us a tour of the production press, explaining to us the cold press process, which still very closely resembles the ancient process.

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Les Moulins Mahjoub has no intention of increasing its production because it is happy with its position as an upscale, boutique producer.  It has no intention of competing with Bertolli, or of providing unbranded liters to European producers who will blend it with Spanish or Italian oil. Roughly 90 percent of Les Moulins Mahjoub’s oil is sold under its own brand, although the remaining 10 percent is sold under the brand (or in the case of Le Pain Quotidien, co-brand) of select partners. The company also sells Tunisia condiments, including its top product by volume, Harissa, which has recently exploded in global popularity.

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The highlight of the visit, which served as a microcosm for the industry overall, was eating lunch prepared by the family in their tasting room. We enjoyed olives and spreads, as well as numerous Tunisian dishes ranging from the familiar, shakshuka and cous cous, to the unfamiliar, breadcrumbs mixed with preserved lemons, garlic, harissa, and chickpeas prepared in broth. The third-story tasting room provided aerial views of the olive groves and farmland, which stretched into mountains in the horizon, a surprisingly beautiful setting reminiscent of Californian wine country.

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Despite its premium product, Tunisian olive oil faces two challenges in its luxury positioning: first, there’s a lot of olive oil labeled as extra virgin that isn’t in fact extra virgin; second, Tunisian olive oil lacks the brand recognition of olive oil from countries like Italy and Spain. Tunisia was featured at New York’s Fancy Food Show this year, suggesting the beginning of its improved global recognition, but there’s still a ways to go. After sampling numerous brands of Tunisian oil and spending a day at Les Moulins Mahjoub, Tunisian olive oil gained another 30 brand ambassadors in our class.

-Zoe Fox ’17

Global Immersion: Doing Business in North Africa

Real Estate Association Study Tour: Final Thoughts

Our final day abroad was spent traveling to Hong Kong, experiencing the process of passing through immigration from mainland China to Hong Kong Island. We learned that due to political limitations, there is a daily cap of residents of mainland China who are able to visit Hong Kong in any given day.

Our planned company visits were complete and we had a full day on Saturday to explore Hong Kong. The island was not as I expected it. Previously, I saw photos of the International Finance Center, a sky scraper housing restaurants, a mall, the logistics and baggage transfer portion of Hong Kong airport and large firms in its tower. I extended this image to the rest of Hong Kong and imagined it as an island covered in large, marble office towers housing retailers of luxury goods.

Instead I explored the narrow, hilly streets lined with everything from local fare to high-end fashion designers and artisans’ boutiques.  We visited the Police Married Quarters (PMQ) which is an adaptive reuse project consisting of two buildings formerly used as police barracks that have been transformed into a unique shopping mall housing local and international artisans and their trendy wares. The phrase “hipster central” would be an appropriate descriptor of this mall.

The city has rich character. Unfortunately, we only visited for one short day and were unable to see even a fraction of the sights available to us. Unlike during the previous days, we used Saturday to explore the city in small groups, deepening our conversations with one another and really coming together as a group.

As I reflect on this past week during my 16-hour plane ride home, the following thoughts come to mind:

  1. I’m grateful for the opportunity to witness China develop as a nation. I’m curious to see if this government-initiated (almost forced) growth and expansion will propel Guangzhou and Shenzhen into sustainable growth or if it will create the next ghost cities due to oversupply of office buildings.
  2. What is the future of public transportation expansion in Singapore and China as this is the one feature critical to upholding future real estate development?
  3. Will China ever place a moratorium on the number of massage parlors present?

 

Nicole Atoyan ‘17

Real Estate in China: Just Build It

Heavy mist and grey skies greeted us as we walked off the plane in Guangzhou, China. The same climate bid us goodbye as we drove to Shenzhen one day later.

The last two days in southern China, first in Guangzhou then in Shenzhen, have been fast-paced as we’ve visited 7 major leaders in the real estate landscape here. The contrast between Singapore and southern China is stark. Singapore is a small city-state with a population of 5.4 million people. Guangzhou, largely recognized as the world’s manufacturing center, boasts a current population of 14 million and is one of China’s 5 National Central Cities. Singapore is pristine. Guangzhou is noticeably a busy, less manicured manufacturing hub and exhibits signs of development. There is a far greater number of cranes in the sky in Guangzhou and Shenzhen than there are in Singapore. Construction is around every corner, largely because land owners must develop newly-purchased land within 2 years of purchase and understand that building income-producing real estate assets is a safe harbor compared to holding cash that may lose value against other international currencies.

We were fortunate enough to visit the the Ping An Financial Center – a 600-meter (1800-foot) Class A office building, which is soon to be completed. This building is the third largest in China and is due to open in April. It will house Ping An, a large regional life insurance company, and several high technology and finance companies. Most importantly, its construction marks the creation of a structural icon in southern China, much like the Empire State Building is in New York City. In fact, the building’s ownership originally requested it look identical to the Empire State Building and subsequently scrapped the idea after viewing the model and deciding that the scale and shape of the structure didn’t quite match the surrounding real estate. The building is 118 floors and boasts an observatory: the first in Guangzhou and undoubtedly a future major attraction and revenue source. We donned hard hats through the construction site, boarded one of 4 double-stacked elevators and travelled to the 56th floor where we experienced the leasing team’s impressive marketing video on floor-to-ceiling screens all around us. We were 1 of 15 tours that day.

On the social front, the LN Garden Hotel in Guangzhou hosted a happy hour for our group, complete with a live band, a dim sum bar, a noodle bar, a full dessert table and a party bus. After a long day of traveling from company to company, this was a welcome surprise! An even better surprise occurred when our resident singer requested Frank Sinatra’s New York, New York and took the stage to serenade us all for the next 5 songs. Dancing en masse ensued. Pictures are of course provided below. Who knew we had so much CBS talent in our group?

Nicole Atoyan ’17