More blacks at property auctions
THE traditionally white male property industry is gradually changing to reflect the countrys demographics, judging from the number of black buyers at South African property auctions.
Rael Levitt, CEO of the Alliance Group, the holding company of auction group Auction Alliance, says he has no doubt that in five years time, black buyers will constitute the majority of private commercial property investors in SA.
Levitt says the biggest trend the group is noticing at its auctions is that black buyers are flocking to pick up commercial, residential and agricultural properties.
He says these buyers are also the most confident, paying the highest prices and outbidding many of the old stalwarts.
According to research conducted by the University of Cape Towns Unilever Institute, SAs black middle class grew 30% last year, representing 2,6-million people and 12% of the countrys black population.
Spending power among the black middle class grew to R170bn at the beginning of this year, from R130bn at the end of 2005. Levitt says the effect of these findings is being felt hugely in the local property market.
He says Auction Alliance finds that in Johannesburg at least one-third to half of registered buyers at property auctions are black .
In Durban and Pretoria more than half are black but in Cape Town it is only 10% .
Levitt says Cape Town does not have a large black population with large amounts of disposable income and who are looking for investment opportunities. The black buyers in Cape Town are also usually from Gauteng.
Levitt says Auction Alliance is now gearing its auctions for the black market.
The majority of the black buyers are new entrants to the property market so we are spending a lot of time educating buyers. Before auctions we are having lectures for first-time bidders who havent bid before and for people who have never transacted in the property market before.
Herschel Jawitz, CE of real estate agency group Jawitz Properties, says the market is seeing an increasing change in the demographics of buyers, especially in Gauteng.
However, the shift to perhaps more black buyers is a gradual process and that is as a result of the time it takes to build a strong middle class, says Jawitz.
He says that about 20% of the prospective buyers that come to Jawitz looking for residential property are black.
We are seeing an increasing number of black buyers not only looking for homes to buy to live in but also for investment purposes, he says.
Musa Ngcobo, chairman of commercial property association Sapoas transformation committee and a member of the Property Charter Council, which is overseeing the implementation of the charter in the property sector, says black buyers should in time represent the largest segment of buyers, all things being equal based on the population demographics of the country.
But Ngcobo says property also costs money and that property prices are increasing all the time.
If established players cant buy in at these levels, if the levels increase, how are new entrants going to buy particularly in the highest-bid auction environment?
Article by: Nick Wilson - www.businessday.co.za