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
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.
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