June 2004 and what Business Day had to say about real estate in South Africa.

New mall for Tyger Valley

MINI Cape Developments, a joint venture between black empowerment group Kagiso Property Holdings and Trakprops, has bought the 7ha Mini Cape site adjacent to Tyger Valley Centre from the city council.

The site development plan has been approved and development of the new retail centre will start shortly.

The transaction concludes the tender and urban planning process that has been under way since 2000.

To be known as Willowbridge, the R150m first phase of the lifestyle centre is aimed at complementing the upwardly mobile area.

Anchor tenants will be Pick 'n Pay, which will take up 2300m²; Wetherlys, which will take up 2500m²; and Osiers, which will take up 1025m².

Negotiations with retailers are at an advanced stage.

Jun 23 2004 09:20:45:000AM Business Day Reporter Business Day 2nd Edition

Finlay backs Rivonia facelift

PROPERTY management company Finlay & Associates will help with the financial backing of the initial stages of establishing a city improvement district in Rivonia.

Finlay's senior commercial portfolio manager, Michelle Vermeulen, says that the "demise of Rivonia is still rectifiable".

Vermeulen says the entire business district of Rivonia needs a facelift and all its landlords should become involved as soon as possible. Finlay manages seven buildings in the area.

City improvement districts in Rosebank and Sandton will be repeated in Rivonia. Kagiso Urban Management is launching the initiative.

"We are excited to be initiating this effort with Kagiso, alongside other property owners. The success we've experienced from the initiatives in Rosebank and Sandton now needs to feed down into the smaller peripheral nodes," Vermeulen says.

She says that according to recent figures from commercial property association Sapoa, it is evident that Rivonia is one of the harder-hit areas in terms of rising office vacancies.

"Although rentals remain competitive, the area deters businesses," she says.

"It is well situated near the N1 and Sandton, rentals are cheaper than Sandton, so it deserves to be successful.

"However, it lacks lustre as a corporate business district compared with the likes of Sandton and needs serious attention."

Anne Steffny from Kagiso Urban Management says thatThe suburb should see a city improvement district in Rivonia by the end of the year.

Jun 23 2004 09:20:45:000AM Business Day Reporter Business Day 2nd Edition

SA housing market robust

ALTHOUGH the fundamentals of the South African residential property market are still strong, it is possible that price crashes in Australia and England could cause investors here to start investing in other areas .

SA has a number of structural factors that should continue to bolster the residential property market. But a lot of investors in SA believe that the local market follows global trends.

Absa senior economist Jacques du Toit says that if a market turns in another country, it is possible the same could happen in SA. "People take notice of what happens in other markets and they become scared that it may happen here. It is possible that to some extent they can start investing out of property," says Du Toit.

According to a housing market update from Capital Economics, there are signs that the housing market bubble has finally burst in Australia.

Capital Economics stresses that the fall in Australian house prices has yet to be confirmed.

However, the group says that in its recent monetary policy statement for May, the Reserve Bank of Australia noted that after rapid increases during 2003, indicators for the March quarter of this year point to falling prices in most major cities.

The central bank says much of the information is provisional at this stage.

Capital Economics says that even if outright falls in house prices are confirmed in the first quarter, it does not necessarily follow that a housing market crash is inevitable.

In the UK last week, newspapers also reported that there was concern about a possible house-price crash in the country.

However, Du Toit says there are structural factors that are supporting SA's residential property market and make a bubble scenario unlikely.

"When it comes to factors like house price to earnings ratios we are far off the peak we saw in the early 1980s in SA when the bubble burst," says Du Toit.

Several factors should continue to bolster the South African residential property market.

These include personal tax relief, lower transfer duties, strong growth in the real disposable income of households and a declining ratio of household debt to disposable income .

In addition, demand in SA is boosted by relatively low inflation and interest rates, the increasing number of households and a rapidly growing black middle class. Although an interest rate increase is on the cards later this year, it is expected to be only a small one.

But Du Toit does say that there are areas in SA where rentals have stabilised or declined.

The norm for the ratio of rental income to the purchase price of a house has been about 1%. "It seems not to be the case anymore," he says.

Jun 23 2004 09:20:45:000AM Nick Wilson Business Day 2nd Edition

From: www.bday.co.za