September 4, 2007
By Lucille Davie
WHILE the City and developers are hamstrung by having to find alternative accommodation for tenants when they wish to refurbish buildings, one man has found a solution: he creates alternative accommodation.
Property entrepreneur Graham Pieterse, the chief executive of City Re-mix, says he has created 18 "bachelor communals" from four flats in Yeoville's Athol Court. A "bachelor communal" is a single room of some 24m² with a small kitchenette, a basin, a built-in bedroom cupboard and sufficient space for a double bed. Communal bathrooms cater for the 18 flats.
"We just took advantage of the status quo," Pieterse says. "We didn't fight the system." People are already renting single rooms in three-bedroomed flats or houses, so he has simply taken the idea and upgraded the room, giving it basic cooking capabilities and storage capacity, and then rented it out.
"It's been a major success, and is affordable at R1 400 to R1 800 a month. Athol Court has become a five-star hostel."
Only two people per room are allowed, and inspections are carried out to ensure this rule is maintained. And the security in the building has been upgraded as part of the deal.
Pieterse has converted four other buildings in Yeoville and Bellevue to bachelor communals, and has bought a further 38 properties in Yeoville, Bellevue and Bellevue East, most of them in the immediate vicinity of Rockey Street, to be renovated as flats. Another 14 buildings are being registered.
Art deco buildings
Pieterse particularly likes Yeoville because of its profusion of art deco buildings. He plans to restore the ones he owns to their former splendour and so help to regain the distinctive cosmopolitan feel of Yeoville. "I don't want a Melrose Arch or Sandton – I want the bohemian feel, I want to promote African culture. We want to work with cultures we've got there, like Zimbabweans and Nigerians."
Yeoville has come a long way. Declared in 1891, with scattered houses with attractive features like turrets, chimneys and Victorian verandas, these days the suburb is an interesting mix of single- and double-storey homes interspersed with residential blocks no taller than five storeys. The only other suburbs in Joburg dominated by blocks of flats are Killarney and Hillbrow, the latter with particularly tall blocks.
All building in the neighbourhood stopped during the depression of 1929, but resumed again in 1933, at the height of the art deco craze that was gripping the world. The suburb has over two dozen art deco residential blocks, some quite quirky but most true to the style of portholes, symmetrical lines, rounded corners and balconies, but with modernist touches.
The architects of the times took up the challenges of Yeoville's hills and dales with relish – the blocks curve imaginatively around corners, adding style to the suburb.
At first it was an English upper-middle class suburb, with a large Jewish community - there are seven synagogues in Yeoville - and a Portuguese section. "It was a happy, mixed community," says Flo Bird, the chairperson of the Parktown and Westcliff Heritage Trust, a body championing the heritage of the city.
Gradually, through the 1990s, the nature of the suburb changed – Nigerians, Congolese and Zimbabweans moved in and other languages were heard on the streets. The nightclubs and bars that line Rockey and Raleigh streets attracted drug dealers, and the suburb became rough around the edges.
Overcrowding added to this roughness and, by the late 1990s, Yeoville was looking decidedly jaded.
Changing fortunes
But its fortunes have turned in the past few years. In line with Johannesburg's desire to revitalise the inner city, of which Yeoville is a suburb, the Yeoville park was revamped in 2006 and re-opened in May this year, providing a necessary green lung.
"We are proud to have played a role in the revitalising of the park," the chief executive of the Johannesburg Development Agency (JDA), Lael Bethlehem, said at the time.
In addition, over the next year the agency will spend R12-million on a revitalisation programme in the suburb.
There have also been several clean-up campaigns in the past year. Pikitup has placed 200 swivel bins and 1 500 240-litre bins in Yeoville and Bellevue, and has supplied residential blocks with more wheelie bins. Several large underground bins are being considered.
In late 2004, a Yeoville resident, Gabrielle Ozynski, tiled the entrance to the Yeoville swimming pool with mosaic, uplifting that corner of Raleigh Street. She said she had hoped to change "something worthless into an attractive corner".
The Rockey/Raleigh Street City Improvement District (CID) is in the early stages of establishment. It will run from Joe Slovo Drive in the west to De La Rey Street in the east. Business owners will contribute to the improvement of the street by means of levies, which will pay for guards and cleaners.
Rent-a-Painter and Rent-a-Builder
Pieterse started off in the painting business in the northern suburbs of Greenside, Parkhurst and Parkview. His business, Rent-a-Painter, soon grew to include Rent-a-Builder.
But he came to feel that his customers were taking advantage of him – he would paint a house and never receive the final payment, with the owner raising petty complaints about the work, and it wasn't worth his while to take them to court. He found his patience running short with these "white collar criminals" and felt he needed a new strategy.
And so he bought Astonia Mansions in Braamfontein, converting it into single-room student accommodation. From there Pieterse shifted his focus to Yeoville. He bought buildings taken over by building hijackers and endured death threats while negotiating to get prostitutes and drug dealers out.
He could raise debt finance to buy the buildings, but not equity finance to turn them around, he explains, and turned to the Trust for Urban Housing Finance (TUHF). Pieterse ascribes the move as the "reason for his success".
"We went out with faith, saw a bargain and bought it," he says. "Luck plays a big part, our timing was very good. We just bought and bought and bought."
TUHF is a development finance company that provides short- and medium-term loans for buying and improving residential properties, particularly in inner city areas. It finances projects from R50 000 to R10-million. The company began in June 2003 and is based in Joburg, but has recently spread its wings to Durban and East London.
TUHF's strategy is to concentrate on small areas, thereby creating buoyant residential property markets within specific neighbourhoods. It makes loans on the basis of companies having yearly targets of acquisitions; they are penalised if they don't buy properties.
Rentals
Within six months, because of rapid growth, Pieterse could refinance the business. "We went out on a limb; we raised the bar for rental prices."
People said that he wouldn't get decent rentals in Yeoville - he wanted to charge R3 500. He has proved them wrong; he gets that rental for two-bedroomed flats in the suburb and R4 500 for three-bedroomed flats.
What he offered for that price was secure and safe buildings - and more. Where people previously would have caught two or three taxis to work, spending hours on the road, Pieterse offered them a place to stay close to their places of work and a decent place to live.
"I actually prefer tenants in the UDZ [urban development zone – the CBD and surrounds]. They are so appreciative," he says.
He compares this with the four houses he owns and rents out in Greenside and Roosevelt Park. Here he gets "grudge rental", with tenants complaining frequently about little things.
Of course, a big factor in achieving the rentals he wants is selecting tenants carefully. They are properly screened; they are interviewed and references are checked. And there are strict rules at the student accommodation in Braamfontein – they have a 10pm curfew and have fingerprinting access control into the building.
He has converted one building into sectional title. Three years ago flats were selling for between R25 000 to R40 000, now they fetch prices in the R150 000 to R180 000 bracket.
Beacon Royal
One of Pieterse's most successful refurbishments is Beacon Royal, on the corner of Louis Botha Avenue and Grafton Road, in Yeoville.
Bird describes the building: "It is a fine art deco building designed by Obel and Obel (of Astor Mansions and Circle Court). But it became very dilapidated and was taken over by hijackers. Even they despaired and actually sold the building that they didn't own!"
Pieterse bought it for R450 000 in 2004, and refurbished it for R2-million. He estimates that its value now is R4-million, achieved in just two and a half years.
The renovated Beacon Royal, back to its former splendour
Built in 1934, the splendid building had become very rundown and by 2002 it looked like a "dumping site". Windows were broken, paint was peeling, water damage was evident, toilets were not functioning, electricity had been cut off, and tenants were using candles and primus stoves, Bird says.
City authorities said it was too dangerous for an inspector to enter the building. "There seemed no hope it would survive," she adds.
When Pieterse bought it, he had to obtain a court order to evict the hijackers, who threatened him. The City's taskforce finally cleared the hijackers, however, and in October 2005 refurbishment began.
"What had been a cesspit is now an attractive and happy block of flats again, with its original architectural beauty again apparent," Bird adds.
Rockey Street acquisitions
City Re-mix's investments haven't stopped at residential acquisitions. Pieterse says there seems to be no sense in improving people's living standards without offering them better places to shop and socialise.
So the next move was to look at the shops and businesses along Rockey Street. His company has bought 13 commercial properties along the busy street, or 10 percent of the commercial area.
He expects transfer in six to nine months and plans to refurbish the shops, with a view to attracting retailers like Woolworths and restaurant chains like News Café.
A return of 25 to 35 percent is not enough to get excited about, he says, adding that returns of over 200 percent are being achieved.
"There has been a big buying boom in the past year – a mushrooming of refurbishment overnight. There is such a great demand."
And although he has a need for more equity finance, he is not daunted. "In my soul I am confident it's going to happen."
Pieterse says the market value of his investments is R59-million.
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