With banks asking deposits on home loans, South African property owners can expect rental demand to increase significantly. Absa Home Loans’ Head Luthando Vutula says that it might take some time for banks to return to deposit-free home loans, resulting in people opting to rent rather than buy, and with interest rate set to fall this year, investors might find the buy-to-rent property more appealing.
The hike in rental demand can already be seen according to Trafalgar – South Africa’s national residential property managers. According to their CEO, Andrew Schaefer they kept their offices well staffed over the holiday to be ready for higher demand, although activity was slightly below last December’s.
However, some experts like Absa’s Gavin Opperman says that the current investment yield on the asset subclass of 0.4 percent to 0.6 percent per month of the value will have to change.
Valuer Erwin Rode and FNB property strategist John Loos also say yields would have to rise to somewhere between 6 percent and 8 percent per year.
"Residential property is easier to buy, to understand and to finance than commercial property, so the yield will be lower than the latter's 10-year yield of 9.2 percent," says Loos.
Rode added that that residential property is dominated by owner-occupiers at lower yields than commercial property. To get to the higher yields, rents will have to rise 30-40% over the next few year or prices will have to fall at that rate.
(The information in this article is courtesy of Business Report – Grab that rental property - 16 January 2009.)
Buy farms for sale in Montagu
Sunday, January 18, 2009
Tuesday, January 13, 2009
Tough Market Reduces Agents
The information in this article is courtesy of RealEstateWeb (Market forces cull more agents – new stats – 14 January 2009)
With the number of estate agents cut by around 20% from 2008 it seems inevitable that this number might become even higher in 2009. RealEstateWeb reports that roughly one in every 4 agents in business in January last year has left the industry.
The Estate Agents Affairs Board (EAAB) has released figures stating that, as of last week, 30 528 existing agents had applied for the Fidelity Fund Certificate (FFC) renewals and almost 28 000 have been issued with their FCC’s. This certificate entitles agents to legally receive commission on sales.
According to the EAAB, 2603 existing agents renewed their FFC’s after the extended deadline on November 30 2008. Of the 43 000 agents that were given FFC last year, 26 000 failed to renew their certificates.
Tough economic conditions have forced agents to leave the industry, that only a few years ago, supplied work to 80 000 – 90 000 people.
Some of the agents left have already started businesses on the side to keep their heads above water. Tony Ferreira of Help-U-Sell in Mpumalanga is among those who have decided to throw in the towel.
There are however those who are staying positive in these tough times. Wilma Smit of Property Voyage in Pretoria said that her agency would definitely take on new agents this year. According to her, the 12 agents at her company did well in 2008.
For those agents who focus mainly on commercial and industrial property, things are looking better.
Buy property for sale in Ashton
With the number of estate agents cut by around 20% from 2008 it seems inevitable that this number might become even higher in 2009. RealEstateWeb reports that roughly one in every 4 agents in business in January last year has left the industry.
The Estate Agents Affairs Board (EAAB) has released figures stating that, as of last week, 30 528 existing agents had applied for the Fidelity Fund Certificate (FFC) renewals and almost 28 000 have been issued with their FCC’s. This certificate entitles agents to legally receive commission on sales.
According to the EAAB, 2603 existing agents renewed their FFC’s after the extended deadline on November 30 2008. Of the 43 000 agents that were given FFC last year, 26 000 failed to renew their certificates.
Tough economic conditions have forced agents to leave the industry, that only a few years ago, supplied work to 80 000 – 90 000 people.
Some of the agents left have already started businesses on the side to keep their heads above water. Tony Ferreira of Help-U-Sell in Mpumalanga is among those who have decided to throw in the towel.
There are however those who are staying positive in these tough times. Wilma Smit of Property Voyage in Pretoria said that her agency would definitely take on new agents this year. According to her, the 12 agents at her company did well in 2008.
For those agents who focus mainly on commercial and industrial property, things are looking better.
Buy property for sale in Ashton
Sunday, January 11, 2009
Property Expectations for 2009
iAfrica reports that despite the expectations for lower interest rates and inflation, the outlook for the South African residential property market in 2009 remains bleak.
According to Jacques Du Toit, senior property analyst at Absa, activity in the market are set to stay subdued up to the second half of the year while price in the middle segment of the market may decline by as much as 2.5 percent in nominal terms this year.
This year might also see a further decline in house prices of up to 8%. This is based on projected consumer price inflation trends to drop in nominal prices.
The Absa House Price Index showed on Friday that nominal annual average house price growth in the middle segment of the market slowed down to below 4% in 2008. This was the lowest price growth recorded since 1996.
Because of declined inflation during this year, we might see prime and mortgage interest rates cut by a cumulative 300 basis points during the course of 2009 to reach a level of 12.5% by year-end. Economic conditions are expected to remain depressed for most of the year. In 2008 we saw a 3% real economic growth, but expect a poor 1% growth for 2009.
Last year’s 2.7% real disposable income growth is set to drop to 1.5% for 2009 and house prices are also expected to remain under pressure.
Du Toit said that we could expect some relief toward the middle of 2009, with levels of activity and prices only improving from 2010 onwards.
The information in this article is courtesy of iAfrica (Property in 2009 – 10 January 2009).
Buy property for sale in Robertson
According to Jacques Du Toit, senior property analyst at Absa, activity in the market are set to stay subdued up to the second half of the year while price in the middle segment of the market may decline by as much as 2.5 percent in nominal terms this year.
This year might also see a further decline in house prices of up to 8%. This is based on projected consumer price inflation trends to drop in nominal prices.
The Absa House Price Index showed on Friday that nominal annual average house price growth in the middle segment of the market slowed down to below 4% in 2008. This was the lowest price growth recorded since 1996.
Because of declined inflation during this year, we might see prime and mortgage interest rates cut by a cumulative 300 basis points during the course of 2009 to reach a level of 12.5% by year-end. Economic conditions are expected to remain depressed for most of the year. In 2008 we saw a 3% real economic growth, but expect a poor 1% growth for 2009.
Last year’s 2.7% real disposable income growth is set to drop to 1.5% for 2009 and house prices are also expected to remain under pressure.
Du Toit said that we could expect some relief toward the middle of 2009, with levels of activity and prices only improving from 2010 onwards.
The information in this article is courtesy of iAfrica (Property in 2009 – 10 January 2009).
Buy property for sale in Robertson
Wednesday, January 7, 2009
Property Investment: Choose the Right Option
If you are considering investing in property there are a few options to choose from – all of them offering their own pros and cons.
According to Craig Hallowes, Association of Property Unit Trust spokesperson and Marriot CEO, Simon Pearse it is best to borrow money when the interest rates are at its highest point. This will ensure that you can afford the debt. It is also wise to invest when the property prices are at its lowest, resulting in a bigger return when the prices start increasing again.
The option when choosing a property investment include:
1. Direct Property Ownership
This investment includes buying your own property with the main idea of renting it out. This type of investment offers you full control over the property but lacks liquidity and demands a high entry cost. You also need to actively manage your investment.
2. Joint Venture or Partnership
Here you buy into an investment with the help of other parties. The advantage of this type of investment is that you gain access to higher value properties without paying it on your own. This investment also lacks liquidity and there is little or no diversification of assets. Apart from the low-income yield, there is also the odd chance that you might run into disagreements with your partners.
3. Property Syndication
This is an unlisted investment scheme that enables a group of investors to buy property and become part owners – either directly of indirectly. These schemes can be structured in different ways with a number of cost layers attached to them. This is beneficial because you pay lower individual entry cost as it is spread amongst a group of investors, but can involve very high maintenance costs. Besides the fact that there is no formal market (making it hard to control) there is also scope to manipulate property values. It is hard to exit this type of investment with the liquidity constraints that it offers.
4. Listed Property
This is Property Unit Trusts (PUT’s) and Property Loan Stock (PLS’s), which is effectively REIT’s. These are listed on a financial exchange like the JSE. The benefits of this type of investment are that it is highly liquid and managed by professionals who can select the best properties. This investment offers costs that leaves nothing to implications and protects the investors with a highly regulated market. The only disadvantage is that you can’t control which properties are purchased but you can sell in the very liquid market if you do not like the strategy of the PUT or PLS.
5. Exchange Traded Funds (ETF)
This investment is established as a collective investment scheme much like a unit trust. The aim here is to replicate the price and yield performance of a specified Index as far as possible. These units or shares are generally listed on a financial exchange like the JSE. Benefits include a low entry cost and easy access as well as flexibility. It is highly liquid and transparent in terms of the investment and interest and offers a well-regulated market. The downside is that you can’t manage your portfolio actively should you wish to.
6. Collective Investment Schemes
This evolves a unitised fund set up under a trust deed that allows investors to participate in a larger pool of property assets. This investment is highly liquid and managed by professionals. It offers explicit costs and a considerable diversification of assets both geographically and across sectors – all in a highly regulated market. A disadvantage is steep management fees.
7. Offshore Property
This investment can be made in any of the options above, however the additional dimension of offshore investment diversification is added, for example, property in Paris or London. This diversification is a great benefit as you can spread your risks across different geographical regions. The exchange rate risk is a disadvantage and so is the fact that you might not understand the foreign market and buy into low-quality properties. - Elizabeth McLachlan
Invest in property in South Africa
According to Craig Hallowes, Association of Property Unit Trust spokesperson and Marriot CEO, Simon Pearse it is best to borrow money when the interest rates are at its highest point. This will ensure that you can afford the debt. It is also wise to invest when the property prices are at its lowest, resulting in a bigger return when the prices start increasing again.
The option when choosing a property investment include:
1. Direct Property Ownership
This investment includes buying your own property with the main idea of renting it out. This type of investment offers you full control over the property but lacks liquidity and demands a high entry cost. You also need to actively manage your investment.
2. Joint Venture or Partnership
Here you buy into an investment with the help of other parties. The advantage of this type of investment is that you gain access to higher value properties without paying it on your own. This investment also lacks liquidity and there is little or no diversification of assets. Apart from the low-income yield, there is also the odd chance that you might run into disagreements with your partners.
3. Property Syndication
This is an unlisted investment scheme that enables a group of investors to buy property and become part owners – either directly of indirectly. These schemes can be structured in different ways with a number of cost layers attached to them. This is beneficial because you pay lower individual entry cost as it is spread amongst a group of investors, but can involve very high maintenance costs. Besides the fact that there is no formal market (making it hard to control) there is also scope to manipulate property values. It is hard to exit this type of investment with the liquidity constraints that it offers.
4. Listed Property
This is Property Unit Trusts (PUT’s) and Property Loan Stock (PLS’s), which is effectively REIT’s. These are listed on a financial exchange like the JSE. The benefits of this type of investment are that it is highly liquid and managed by professionals who can select the best properties. This investment offers costs that leaves nothing to implications and protects the investors with a highly regulated market. The only disadvantage is that you can’t control which properties are purchased but you can sell in the very liquid market if you do not like the strategy of the PUT or PLS.
5. Exchange Traded Funds (ETF)
This investment is established as a collective investment scheme much like a unit trust. The aim here is to replicate the price and yield performance of a specified Index as far as possible. These units or shares are generally listed on a financial exchange like the JSE. Benefits include a low entry cost and easy access as well as flexibility. It is highly liquid and transparent in terms of the investment and interest and offers a well-regulated market. The downside is that you can’t manage your portfolio actively should you wish to.
6. Collective Investment Schemes
This evolves a unitised fund set up under a trust deed that allows investors to participate in a larger pool of property assets. This investment is highly liquid and managed by professionals. It offers explicit costs and a considerable diversification of assets both geographically and across sectors – all in a highly regulated market. A disadvantage is steep management fees.
7. Offshore Property
This investment can be made in any of the options above, however the additional dimension of offshore investment diversification is added, for example, property in Paris or London. This diversification is a great benefit as you can spread your risks across different geographical regions. The exchange rate risk is a disadvantage and so is the fact that you might not understand the foreign market and buy into low-quality properties. - Elizabeth McLachlan
Invest in property in South Africa
Monday, December 29, 2008
Student Rentals a Safe Investment
There is one recession-proof property investment in South Africa that experts swear by – student accommodation.
According to Berry Everitt of Chas Everitt International, the demand for rental units near campuses is growing as student numbers increase year-on-year. Everitt stated that universities are struggling to build additional student residences which means that student are relying on the private sector for housing.
To secure your investment, Everitt said that rent for student accommodation per square meter is higher than residential units. To find a student tenant is also easier with many institutions compiling free property listings, which are distributed at the end of each academic year.
Everitt advised that one should look to invest in property close to the campus, as rates are higher in these areas. At the moment Pretoria, Johannesburg and Witwatersrand are showing growth with Potchefstoom also pointing to potential. Everitt advised to keep an eye out for Pietermaritzburg where numbers are expected to grow.
However, Everitt warned, investors need to carefully select property that needs little or no maintenance. Look for robust surfaces that are easy to replace and implement a breakage cost paid by the tenants.
Use December summer holiday to do maintenance in and around the property for most students will not use the accommodation then.
(This article is courtesy of IOL)
Rent property in South Africa
According to Berry Everitt of Chas Everitt International, the demand for rental units near campuses is growing as student numbers increase year-on-year. Everitt stated that universities are struggling to build additional student residences which means that student are relying on the private sector for housing.
To secure your investment, Everitt said that rent for student accommodation per square meter is higher than residential units. To find a student tenant is also easier with many institutions compiling free property listings, which are distributed at the end of each academic year.
Everitt advised that one should look to invest in property close to the campus, as rates are higher in these areas. At the moment Pretoria, Johannesburg and Witwatersrand are showing growth with Potchefstoom also pointing to potential. Everitt advised to keep an eye out for Pietermaritzburg where numbers are expected to grow.
However, Everitt warned, investors need to carefully select property that needs little or no maintenance. Look for robust surfaces that are easy to replace and implement a breakage cost paid by the tenants.
Use December summer holiday to do maintenance in and around the property for most students will not use the accommodation then.
(This article is courtesy of IOL)
Rent property in South Africa
Tuesday, December 23, 2008
Cape Town Voted Best World City
Cape Town has been voted ‘Best World City’ in the 2008 Telegraph Awards. This spectacular destination was voted above major cities like San Francisco and Sydney to walk away with the honours. If that’s not enough South Africa also claimed a place in the top three in the ‘Best Non-European Country’ category.
From the 40 000 people that were used in the poll, 92% said that the credit crunch will have no effect on holiday destination choices. Among the top destination on earth were New Zealand, Australia, South Africa and Canada. Alongside Cape Town were San Francisco, Sydney and Vancouver in the top cities category.
Cape Town’s top tourist attractions include Table Mountain, the V&A Waterfront, Robben Island, the Cape Winelands and Kirstenbosch Botanical Gardens.
Cape Town was also recently voted one of ten cities in the world that are most likely to become a global sustainability centre by 2020.
The same awards saw Singapore Airlines, Virgin, Emirates and Qatar Airways walk away with the people’s favourite airlines.
Buy property in Cape Town
From the 40 000 people that were used in the poll, 92% said that the credit crunch will have no effect on holiday destination choices. Among the top destination on earth were New Zealand, Australia, South Africa and Canada. Alongside Cape Town were San Francisco, Sydney and Vancouver in the top cities category.
Cape Town’s top tourist attractions include Table Mountain, the V&A Waterfront, Robben Island, the Cape Winelands and Kirstenbosch Botanical Gardens.
Cape Town was also recently voted one of ten cities in the world that are most likely to become a global sustainability centre by 2020.
The same awards saw Singapore Airlines, Virgin, Emirates and Qatar Airways walk away with the people’s favourite airlines.
Buy property in Cape Town
Auctioneer Timid About 2009
This article is courtesy of Realestateweb (2009: Auctioneer gazes into his crystal ball – 22 December 2008)
Rael Levitt, CEO of the Alliance Group warns that global events will continue to have a huge impact on the distressed South African economy in 2009.
Levitt says that The Alliance Group, South Africa’s largest asset services and auction group, has experienced a turbulent 2008 with the property market going into free fall from the middle of the year. This started with a sharp increase in car repossessions and then house repossessions. Personal insolvencies followed which left Levitt’s company with large volumes of these distressed markets.
“By the end of the year we saw liquidations following and this December there have been more liquidations of companies than since the turbulent mid-1990s".
Levitt explained that what we are seeing know in South Africa is six months behind the USA, UK and Europe where distress is moving from the retail environment in business. Also following in the global trend is the property market, with a flood of residential stock hitting the market with both forced and non-forced sellers’ values dropping across the board.
Levitt said that by the end of this year, mortgage stress (less than two months in arrears) has grown to over 100 000 and severe mortgage stress (being four months in arrears) has also spiked to over 30 000 home owners. He added that for this to slow down, the Reserve Bank have to slash the interest rates by more than 4% at the start of 2009.
Commercial property, according to him has not been hit that hard even though the banks have tightened up on new finance criterion, which has dampened the demand. Sellers of commercial property prefer a “hold position” rather than discounting their prices. Levitt believes without a doubt that cost inflation will cause an upward pressure on prices and rentals. With rentals increasing as a result of supply constraints, plus lower interest rates, many opportunistic buyers will emerge.
Liquidations have increase sharply with the weakening rand impacting local businesses and both domestic and foreign investor sentiment. This can be seen in the large numbers of liquidations and business closures in November and December. Levitt warns that importers, motor trade, building suppliers and contractors can expect a rough 2009.
However, Levitt still believes that the 2010 Soccer World Cup will improve sentiment in certain sectors. He concluded by saying that those investors who understand the market cycles and who has access to finance, will be the ones who have a once in a decade opportunity to accumulate assets and businesses at fantastic values.
Buy property in South Africa
Rael Levitt, CEO of the Alliance Group warns that global events will continue to have a huge impact on the distressed South African economy in 2009.
Levitt says that The Alliance Group, South Africa’s largest asset services and auction group, has experienced a turbulent 2008 with the property market going into free fall from the middle of the year. This started with a sharp increase in car repossessions and then house repossessions. Personal insolvencies followed which left Levitt’s company with large volumes of these distressed markets.
“By the end of the year we saw liquidations following and this December there have been more liquidations of companies than since the turbulent mid-1990s".
Levitt explained that what we are seeing know in South Africa is six months behind the USA, UK and Europe where distress is moving from the retail environment in business. Also following in the global trend is the property market, with a flood of residential stock hitting the market with both forced and non-forced sellers’ values dropping across the board.
Levitt said that by the end of this year, mortgage stress (less than two months in arrears) has grown to over 100 000 and severe mortgage stress (being four months in arrears) has also spiked to over 30 000 home owners. He added that for this to slow down, the Reserve Bank have to slash the interest rates by more than 4% at the start of 2009.
Commercial property, according to him has not been hit that hard even though the banks have tightened up on new finance criterion, which has dampened the demand. Sellers of commercial property prefer a “hold position” rather than discounting their prices. Levitt believes without a doubt that cost inflation will cause an upward pressure on prices and rentals. With rentals increasing as a result of supply constraints, plus lower interest rates, many opportunistic buyers will emerge.
Liquidations have increase sharply with the weakening rand impacting local businesses and both domestic and foreign investor sentiment. This can be seen in the large numbers of liquidations and business closures in November and December. Levitt warns that importers, motor trade, building suppliers and contractors can expect a rough 2009.
However, Levitt still believes that the 2010 Soccer World Cup will improve sentiment in certain sectors. He concluded by saying that those investors who understand the market cycles and who has access to finance, will be the ones who have a once in a decade opportunity to accumulate assets and businesses at fantastic values.
Buy property in South Africa
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