A per­fect mis­take

As the in­dus­try reeled from the 2008 prop­erty slump, job op­por­tu­ni­ties for newly qual­i­fied ar­chi­tects were as rare as hen’s teeth in 2009. Iron­i­cally, it was this dis­tressed mar­ket that was to be the cat­a­lyst for Jac­ques Van Emb­den’s ca­reer as a res­i­denti

Finweek English Edition - - INSIDE - BY GLENDA WIL­LIAMS

IT WAS A PER­FECT MIS­TAKE. IT ALL JUST FELL INTO PLACE, BUT IT IS GET­TING MORE IN­TEN­TIONAL IN TERMS OF OUR GROWTH AND TAR­GETS.”

Slim pick­ings in the job mar­ket ne­ces­si­tated a c hange in mind­set . Va n Emb­den pur­chased his first prop­erty in 2009 with two friends with a view to fix­ing it up and rent­ing it out. A year later Van Emb­den, armed with a R60m fa­cil­ity, and his i nvestors had ac­quired 10 prop­er­ties, in­clud­ing apart­ment blocks. It was the launch­ing pad for Prime Res­i­den­tial Group, the let­ting arm fo­cused on ac­quir­ing and let­ting prop­erty in the R5 000-R7 000/month price range.

“The core in­vest­ment cri­terium was ur­ban stock, centrally lo­cated to schools and places of work op­por­tu­nity,” he says. “Th­ese are far more de­fend­able, safer as­sets than non-core as­sets like hol­i­day des­ti­na­tions. We were lucky with our tim­ing. In­ter­est rates re­mained low and it also co­in­cided with the change to the per­sonal home loan struc­ture in SA that made it much harder to buy prop­er­ties. So the mar­ket as a whole, es­pe­cially the mid­dle mar­ket, started to trend to­wards rent­ing rather than buy­ing. It was a per­fect mis­take. It all just fell into place, but it is get­ting more in­ten­tional in terms of our growth and tar­gets,” Van Em­den tells Finweek. To­day, with a foot­print in Cape Town and Greater Jo­han­nes­burg, Prime Res­i­den­tial has a pool of 1 600 homes and apart­ments worth R1.2bn.

BRAND BLOK

Hav­ing built a fairly sub­stan­tial em­pire around let­ting, he em­barked on an even more chal­leng­ing project last year. “We were of­ten con­vert­ing build­ings for the mid­dle sec­tor and be­lieved we could take the ex­per­tise we had in ar­chi­tec­ture and con­struc­tion and bring it to the top end of the mar­ket place on the At­lantic Seaboard.”

It was the birth of Blok, luxury res­i­den­tial de­vel­op­ments, that pi­o­neered the cul­ture of apart­ment city living and fo­cused on what Van Emb­den terms in­side-out de­sign for owner-oc­cu­piers. Within six months four new apart­ment blocks had been launched, all, with one ex­cep­tion, on the At­lantic Seaboard. To date, 54 of the 56 units have sold, gen­er­at­ing rev­enue of just over R300m, while a fur­ther three de­vel­op­ments – es­ti­mated to gen­er­ate around R350m in gross sales – have been se­cured.

It ap­pears that Van Emb­den has found a niche in the mar­ket. “There are not enough de­vel­op­ers con­struct­ing

bu il d i ngs f or owner- occ up­ier s . De­vel­op­ers are heav­ily in­vestor-fo­cused and our real value propo­si­tion is al­most to de­velop the build­ings pur­pose-built for our clients,” says Van Emb­den.

In other ur­ban­is­ing cities around the world res­i­den­tial de­vel­op­ers have cre­ated a le­gacy of de­vel­oper-owner col­lab­o­ra­tion and that’s the op­por­tu­nity they want to tap into, he says. The devel­op­ment of the Blok app (see box) for their off-plan devel­op­ment brand is one of their key fea­tures of that col­lab­o­ra­tion.

Un­der­stand­ing the apart­ment life­style and im­prov­ing the city-living ex­pe­ri­ence is one of the group’s strengths. Their smaller, thought­fully con­sid­ered and de­signed bou­tique-type de­vel­op­ments are typ­i­cally 10-15 units rang­ing in size from 50m2 one-bed­roomed apart­ments cost­ing around R2.2m, to a 425m2 pent­house that re­cently sold for R27m. “When we started Blok, we didn’t want our clients to have an ex­tras list. It doesn’t mat­ter what size the apart­ment is, we only have one set of f in­ishes; ab­so­lutely lux­u­ri­ous,” says Van Emb­den, That means Smeg ap­pli­ances, top to bot­tom. But the com­pany is also heav­ily com­mit­ted to us­ing lo­cal prod­ucts, like Oggi Floor­ing and the bio-ethanol fire­places sup­plied by Beauty Fires.

Yet an­other strength is their abil­ity to tackle both brown­field and green­field projects. Brown­field projects present an op­por­tu­nity to rein­vent some­thing that al­ready ex­ists. It’s harder work, says Van Emb­den, but very re­ward­ing and of­fers the op­por­tu­nity to el­e­vate the green rat­ing of th­ese build­ings. And they are at­tack­ing green star rat­ings even with their brown­field projects like their Blok devel­op­ment in Green Point, one that in­cor­po­rates a sub­stan­tial amount of re­cy­cled prod­uct.

BE­YOND THE ERF

Blok goes be­yond the prop­erty, be­yond the erf. Up­lift­ment ini­tia­tives means that they make a last­ing and mean­ing­ful con­tri­bu­tion to the neigh­bour­hoods where they de­velop in. “We want to make sure we are con­tribut­ing to the City of Cape Town be­yond the four bor­ders of our land,” says Van Emb­den. “When we do a Blok project, we also do what we call an ur­ban in­ter­ven­tion. So for in­stance in Green Point we are spend­ing R250 000 up­lift­ing a com­mu­nity park; in Sea Point we are putting up bi­cy­cle racks. It’s our com­mit­ment know­ing that as de­vel­op­ers, we have a huge role to play in the shape of th­ese cities be­cause we inf lu­ence what they look like and what peo­ple’s at­ti­tude to­wards them will be.”

THE SHAPE OF THINGS TO COME

Bold­ness and risk-tak­ing have served Van Emb­den well. So, too, has his abil­ity to en­vi­sion the op­por­tu­ni­ties to be un­leashed from tech­nol­ogy. All qual­i­ties he has put to good use in or­der to stamp his mark on res­i­den­tial prop­erty devel­op­ment in the West­ern Cape. He has also sur­rounded him­self with peo­ple of sim­i­lar ilk; young peo­ple with an ap­petite for life. That in­cludes op­er­at­ing part­ners Joel Rosen, the group’s chief op­er­at­ing of­fi­cer and chief

fi­nan­cial of­fi­cer Sean Friedrich and the 62 full-time staff with an av­er­age age of a mere 29. A fur­ther 480 staff are di­rectly em­ployed through the two arms of the group, but that num­ber is likely to in­crease if fu­ture as­pi­ra­tions are any­thing to go by.

Not only is Prime Res­i­den­tial head­ing for a re­brand to­wards the end of the year, it also has big growth as­pi­ra­tions. “We hope to take Prime Res­i­den­tial up to4 000 apart­ments in the next 18 months and push it to­wards that R4bn as­set value tar­get,” says Van Emb­den.

Nor will the group be rest­ing on its lau­rels with the Blok brand. En­cour­ag­ing de­vel­oper/home­owner en­gage­ment, their new “Blok Ex­hi­bi­tion” show­room will be open­ing on Main Road, Sea Point, in a few weeks. “It’s al­most an ex­ten­sion of the app. You are able to come in and see the kitchens, the bed­rooms, touch the fin­ishes, look at the colour palettes. That is what an owner-oc­cu­pier is look­ing for,” ex­plains Van Emb­den.

Their goal is to keep build­ing homes fo­cus­ing on the ur­ban apart­ment owne­roc­cu­pier. While the brand is par­tial to smaller bou­tique de­vel­op­ments where the cur­rent gross sell-out is be­tween R90m and R120m per build­ing, Van Emb­den says they are ex­plor­ing larger projects. And they are also fo­cused on bring­ing three-bed­room prod­uct to mar­ket. “In Cape Town, there is very lit­tle three­bed­room prod­uct. But it al­lows the life­cy­cle of that prop­erty to be more ef­fec­tive.”

It’s not dif­fi­cult to see why the fo­cus for the group is on ur­ban apart­ment devel­op­ment in Cape Town. They are ob­ses­sive about their Blok projects, keep­ing very close to the de­sign and con­struc­tion, some­thing that would be dif­fi­cult to do if the devel­op­ment were else­where. Right now, they prob­a­bly don’t even need to look fur­ther afield.

“The growth in the City Bowl and Cape Town, in­clud­ing the At­lantic Seaboard, is go­ing to be ver­ti­cal; it’s go­ing up,” says Van Emb­den. Wedged be­tween the ocean and moun­tains means very strict bor­ders and very lit­tle land space; be­cause of this and the City of Cape Town’s pro den­sity stance, many ar­eas have been re­zoned for what is termed “medium-r ise apart­ments” – f ive to eight storeys. Even though he is al­ready jug­gling seven de­vel­op­ments, this is just up Van Emb­den’s al­ley.

Pos s i bl y what s u ms up t he as­pi­ra­tions of this young en­tre­pre­neur who does ev­ery­thing at warp speed is this: “The coun­try seems com­fort­able bring­ing tens of thou­sands of square me­tres into of­fice or re­tail space, but this is in its in­fancy in the res­i­den­tial space,” he says. “We see this as a huge op­por­tu­nity for the group.”

That as­pi­ra­tion is l i kely to put t he coun­try’s res­i­den­tial prop­erty de­vel­op­ers on high alert.

Ren­der­ing of FIFTY8ONV’s living area. Ex­te­rior view of Blok’s lat­est ad­di­tion to the ur­ban fam­ily, FIFTY8ONV

is lo­cated in Vre­de­hoek be­low the slopes of Ta­ble Moun­tain.

One of Blok’s bed­rooms

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