PROFILE
Michael Hartman : Insights , highlights and advice on SA ’ s property development market
By Rory Macnamara
SA Affordable Housing put some questions to Michael , who is not only a property developer , but also chairman of the SA Affordable Housing Developer ’ s Association .
Can you provide some insight into your early career and work life ? I studied Law and became an attorney . After exposure to all the disciplines in Law I found that property was the field that most interested me . I started to focus on conveyancing and propertyrelated matters . I took a keen interest in developments and one thing led to another .
What inspired you to follow this path in property development – your role models and / or Mentors and inspirations ? My family was in construction and I would find myself working on building sites as a young boy during school holidays . I always took an interest in the plans and designs of the new houses about to start and loved the fact that something tangible was taking shape on an empty piece of land . My inspiration came from wanting to deliver quality houses – not merely houses but also a home and livelihood to the new homeowner and his family , benefitting generations to come .
What experiences do you have in mentoring others , and what is your view of the experience ? Several people who started out their careers and worked for me over the years have either built their own homes , are running the construction of mega structures , have their own marketing companies or are employed at large financial institutions .
What mistakes have you made in your career , and what did you learn from it / them ? In 1996 I started out as a small top structure developer . To increase our delivery , we commenced the construction of houses as soon as the client signed the transfer and bond documents , believing that the transaction was now bankable and inevitable . We would complete a house within 4-5 weeks and by the time the property registered the house was ready for handover . The events that followed with rising interest rates in 1997 / 8 caused the whole market to crash and banks went insolvent . All the transactions in the deeds office were withdrawn and we even struggled to get payment for the properties that were registered .
My company was exposed and not one of the clients could get a bond from another bank . We suddenly had over 50 completed houses without buyers . I learned that nothing is certain in our industry and you must always mitigate your risk . Very much like the position we find ourselves in now with Covid-19 . No one would have guessed that the whole world was going to come to a standstill .
Describe the highlights of your career in terms of projects and why they were highlights ? My favourite project is probably a joint venture
Michael Hartman , property developer , and chairman of the SA Affordable Housing Developer ’ s Association .
with the Krugersdorp Town Council ( now Mogale ) where they service erven in Kagiso and allocated erven to top structure developers to package , sell and build new houses . This was a beautiful success story of PPP where the Council made serviced land available without the hunt for profit , enabling small emerging developers to deliver a truly affordable house . We sold a 50m ² house for R50k in 1997 and they are now worth over R600k . Just proof of the value of a house as an investment class .
What are the major challenges you have faced in your career ? How have you overcome them and what learnings did you get from them ? Every decade the property and development industry faces a challenge created by over-optimism and often the abuse of investor sentiment that leads to a property bubble . This normally results in a price correction that severely affects the market . It also affects the buyers ’ and banks ’ willingness / unwillingness to lend . As a developer you always must ensure that you buy land at the right price and do not get carried away with the ‘ Bull Run ’.
In these markets , landowners tend to want too much for their land or even get so greedy that they become developers . Although there have been some exceptions , this generally ends up in ‘ properties in distress ’.
M HARTMAN
12 NOVEMBER - DECEMBER 2020 SAAffordHousing saaffordablehousingmag SA Affordable Housing www . saaffordablehousing . co . za