Weekly Newsletter
Friday, 12 June, 2009
Property Search | Estate Agents | List your property

Edition 23 of 2009, Friday, 12 June 2009

Dear Reader

The Republic of South Africa, a small country located at the southern tip of Africa. Who would have thought that such a small country could play such an important role in the continent of Africa? Who would have thought that the eyes of the world would be on this rainbow nation? It was with great interest that I read a Nigerian property related article and read about my own country.

As the global economic crisis persists, different countries of the world have devised measures for responding to its impact on real estate. CHUKA UROKO writes that top of these measures are cuts in interest rates on mortgage lending and housing loans Developed economies like United States, United Kingdom, United Arab Emirate and even South Africa.

Countries where property market had experienced a boom before the crisis-are at the forefront of nations have adopted friendly measures in the bid to stave off the effect of the global financial crisis on mortgages and housing loans. South Africa has also cut its lending rate but unlike UK, interest rate in the country was not cut heavily. It was cut by just one percent from 12 percent to 11 percent. Whatever the case, at the end of the day, you find that it has made mortgages cheaper and more affordable.
Meltdown: Nigeria in context of global response to impact on real estate

What is the most read property related article on iafrica.com for the past year? “SA’s priciest property” Sought-after by those at the very pinnacle of the social hierarchy, South Africa's most expensive properties are everything you'd expect — extremely luxurious and very private. Personal lifts, scurrying housekeepers, a butler or three, spas and fully equipped home gyms are just some of the humble pleasures that the distinguished owners of these homes have come to expect. More in SA’s priciest property

To renovate or not to renovate? We’ve placed two articles this week on renovations that could help you to answer on this question;

·        To Renovate or not to Renovate? - that is the question

·        Tackling renovation in a down market

It’s been 10 years since the 'rebirth' of Cape Town’s Central City as a residential zone got underway. And although the historic facades of the area may have remained largely unchanged — albeit cleaned up — the profile of buyers has certainly shifted. In the area 2 – Cape Town CBD

The editor


>> Real Estate news – Zambia property pulls foreign investors

Socio-economic factors and contemporary developments are drawing overseas buyers to Zambia.

That’s the news from Chandalala Kondolo, principal of the Chas Everitt International franchise in Lusaka, who notes that foreign buyers are increasingly gravitating to Zambia given the favourable exchange rate and the fact that the country will soon be home to some very upmarket mixed-use developments.

“The only downside is that foreigners can’t own property in Zambia unless they are permanent residents or own a company in the country, but many foreigners are only too happy to meet these prerequisites as they believe Zambia to be a worthwhile country in which to invest.

“A large percentage of buyers are South Africans who have set up businesses and bought both commercial and residential properties. A number of South Africans have also bought lodges in game parks and are doing very well. South Africans also dominate the rental sector and although they aren’t really buying holiday homes yet, we expect this to change soon.”

Two new developments in Lusaka, the Heart of Africa and the Jewel of Lusaka are also attracting foreign interest.

>>Meltdown: Nigeria in context of global response to impact on real estate

As the global economic crisis persists, different countries of the world have devised measures for responding to its impact on real estate.

CHUKA UROKO writes that top of these measures are cuts in interest rates on mortgage lending and housing loans Developed economies like United States, United Kingdom, United Arab Emirate and even South Africa-- countries where property market had experienced a boom before the crisis-are at the forefront of nations have adopted friendly measures in the bid to stave off the effect of the global financial crisis on mortgages and housing loans.

Nigeria has not shown any serious commitment in this direction, though that is understandable given that the country is yet to develop a functional mortgage system.
UK banks now provide cheap funds for loan seekers. In October last year, the country had its lending rate at 4 percent. Right now, it is as low as 0.5 percent. When it was 4 percent, most banks were lending at 4.75 percent. What this means is that the cost of funds is cheap, making it attractive for people to borrow to buy or build homes.

An international real estate investor and consultant, Gbenga Olaniyan, who disclosed this in an interview with Business Day in Lagos, stated that UK banks were trying to normalize things to enable them give out these mortgages, adding, "it is expected that by the end of this year, the effect of this move must be felt; with the cheap loan, what it means is that more people will be able to afford to buy".

>>SA Housing Market


The risk averse attitude of South Africa’s banks – not the recession – is the main reason why the housing market is still so sluggish, says Tony Clarke, MD of Rawson Properties.

“The demand for housing is there – but the finance is not,” he said.  “The banks did exceptionally well of out of housing loans during the boom period of 2005 to 2007 – since then they have had a record number of bad debts, repossessions and mortgage loan readjustments.

“It is not at all surprising therefore that they are now risk averse.  Keeping a close eye on the job and credit market, they know only too well how many people are losing their salaries and how many are dangerously in debt.  In the circumstances, it is understandable that their goal now is to avoid any further losses and to rebuild profits – and we who develop and market property are not unsympathetic.

“However, the consensus of opinion now in the property marketing sector is that it is time the banks came back to the party, took a more lenient view and did their bit to revive the market by accepting buyers with stable jobs and good credit records.”

Clarke added that this plea was not unreasonable because “the banks have to accept some of the responsibility for the current predicament in which the housing sector finds itself”.

>> Political stability bodes well for the property market

The stable political climate since the recent elections is providing a foundation for the property market’s recovery.

“Markets, including the property market, do not like uncertainty and the peaceful and orderly re-election of the government, if viewed pragmatically, is a positive development,” says Gerhard Kotzé, CEO of the ERA South Africa property group.

 “Perhaps the clearest indicator of this is the fact that the value of the rand has strengthened since the elections.  Currencies always provide a barometer of opinion about the prospects of a country and clearly, investors see SA as having a stable business environment, which although impacted by the global slowdown, has weathered the storm surprisingly well.”

He says this is not to deny that the country faces serious problems. “The latest GDP figures show that we are definitely in a recession, predictions are that unemployment will reach official levels of 25% or more and exports are way down. 

“Predictions are, however, that towards the end of 2009 the economy should start showing a flicker of life and likewise, the property market will, in all likelihood, begin to see the first ‘green shoots’ of a recovery.

“In the interim, on the positive side, SA’s hosting of international sporting events such as the Indian Premier League cricket, the Confederations Cup and the Soccer World Cup next year, has kept the mood in South Africa more buoyant than in most countries.

>> SA's priciest properties

Article By: Kabous le Roux

Wed, 10 Jun 2009 07:45

'SA's priciest properties' first appeared on iafrica.com on 2 July 2008. It is the most read 'Property/Hot property' article of the past year.

Sought-after by those at the very pinnacle of the social hierarchy, South Africa's most expensive properties are everything you'd expect — extremely luxurious and very private. Personal lifts, scurrying housekeepers, a butler or three, spas and fully equipped home gyms are just some of the humble pleasures that the distinguished owners of these homes have come to expect.

Offering panoramic views of Table Mountain or overlooking the beautifully bronzed bodies lying on the white, sandy beaches of Clifton, these homes inspire envy and admiration in equal parts.

Unsurprisingly, South Africa's richest provinces — Gauteng and the Western Cape — dominate the tops spots with a single KwaZulu-Natal property just squeezing into the Top-12 positions in terms of highest purchase price.

Three sectional title properties sneak into the Top-12 — the most expensive property ever sold in this country (we'll get to this one later), a unit in the exclusive suburb of Clifton in Cape Town that fetched price of R46.5-million in February and a unit in the Simbithi Eco Estate near Ballito in KwaZulu-Natal that achieved R30.1-million in April of 2007.

The remainder are free standing and range in price between R32-million (Hyde Park, Johannesburg) and R106-million (Noordhoek, Cape Town). Other suburbs that feature are Jozi's Morningside, Sandhurst and Douglasdale as well as the leafy Mother City neighbourhoods of Bishopscourt and Newlands.

>>Upmarket tenants are turning into buyers

Tenants in Silver Lakes, one of Pretoria’s prime residential estates, are increasingly opting to buy homes of their own.

Linda Bodenstein of RealNet Silver Lakes says the trend has been noticeable since last year and that several tenants in the estate have bought homes this year.

“Silver Lakes is one of the most popular lifestyle estates in the city because of the high security, the golf course – one of the top 40 in the country – and convivial club house, as well as the setting, which includes a series of lakes. Several antelope roam the estate and water birds are prolific,” she says.

The estate, which was established about 15 years ago, has also earned an enviable reputation as one of the best-managed estates in the country. Bodenstein says the homeowners’ association is extremely active and capable. “The association basically acts as a mini-municipality and manages all aspects of upkeep, including maintaining the roads.”

She adds that there is a strong rental component. “Many investors have bought multiple units through the years and currently about 60% of the homes in the estate are tenanted. Rental units have drawn residents looking for a safe and secure lifestyle and we have seen a strong inflow from surrounding areas such as Waterkloof and Lynnwood because of mounting security concerns in the suburbs.

“However, increasing numbers of these tenants are now opting to buy their own homes and settle permanently in the estate.”

Rentals range from around R12 000pm for smaller duet units to R50 000pm for luxury homes on the golf course. The latter category mainly caters for executives of international corporations working in the capital city on contract.

>> Municipal rates to drop?

Article By: Pam Golding Intellectual Property

Wed, 10 Jun 2009 08:12

We are coming up to that time of the year when administered costs once again start stretching the rand in one’s pocket. Electricity charges will shock and, no doubt, household rates will increase once again. Municipalities around the country will be sharpening their pencils as they seek more and more income with which to cover the current boom in infrastructural spending. The race to finish developments in time for the Soccer World Cup next year will no doubt produce a rash of over-runs, budget deficits and cash flow calamities.

For homeowners, the annual rates rip-off will evoke the usual acrimonious debate. But property is an easy target. The fact that imposing charges on property owners (and no one else) is an imperfect system of funding public facilities is simply ignored.

Cape Town will be an especially interesting focal point. Not only has the Democratic Alliance retained control of the city but it now holds sway over the Province. Much has been promised by the DA in terms of improving the running of the Mother City following the much criticised term under the control of an ANC majority during which charges of corruption, nepotism and mismanagement ran wild. And make no mistake; the new centurions will have their work cut out to balance the books. Given the current war of words between the two political parties, the DA can’t expect too much in the way of Central Government handouts.

>> Ensure that you do have a copy of your TITLE DEEDS, says APKF MD

It sometimes happens, says Lanice Steward, MD of Anne Porter Knight Frank, that the seller of a house finds his transfer held up because there are no title deeds.

The attorneys, says Steward, should give every buyer their deeds on taking over the home but in practice this quite frequently does not happen and when the deeds are looked for at the attorney’s office, they are simply “not there”. 

This occurs most frequently when the bond has been paid up or the house is sold for cash.

It can then take 15 working days to get another set of the deeds from the deeds office and transfer is delayed.  Sales have even fallen through because of this.

Steward advised all homeowners to check if they have their deeds and, if not, to apply for them now.

“You can never know when you might need them,” she said.

For further information contact Lanice Steward on 021 671 9120 or email lanice@anneporter.co.za.

>> Chas Everitt

>>Water heating blues

Having recently had a burst geyser, I have discovered firsthand the dramas surrounding the re-instatement of a convenience that I have oh-so-easily taken for granted. . . . hot water on tap.

Even though most mortgages offer an ‘automatic’ inclusion of Bricks & Mortar insurance that most times covers burst geysers, the inconvenience is still a factor – and the fact that there’s an excess means that those who are insured are still out of pocket at the end of the day.

It turned out that my geyser was still under guarantee, but the warranty claim was quite a mission to enforce. It’s been through this exercise that I discovered many ‘did-you-knows’ that are not as obvious as one would expect.

>>To Renovate or not to Renovate? - that is the question

The big question is: are you going to live in the property or are you intending to rent it out? If you are going to live in the property by all means renovate for your own comfort. But watch out: unless you are within 18 months of selling up, any renovations could be a complete waste of money.
So if you own your home and are thinking of renovating to upgrade it before sale – or even if you are turning over an investment property - here are some golden rules.

Know your market

If you are a devotee of home improvement shows (of which there are a myriad), you will already know the major mistakes investors and renovators make:

  • Renovating in their own taste and not looking at the tastes and needs of potential buyers
  • Taking too long to complete the renovation (time is money)
  • Going way over budget

>>Tackling renovation in a down market

You have been transferred and need to sell your current house – what to do?

Well, says Berry Everitt, CEO of the Chas Everitt International property group, presenting your house at its best in any market it is still sound advice.

“But it is also true that in a market where prices are soft and buyers still scarce it is imperative to keep the market value in mind before you embark on extensive renovations in an effort to attract prospective buyers.”

In this market, he says, it is a mistake to invest too much money in renovations that you cannot recoup when the time comes to sell because they would price the property out of the market.

Writing in the Property Signposts newsletter, he notes: “The best course of action is to take a hard and objective look at your home or call in the help of someone who will give you an honest opinion. If you have kept up with maintenance work, the property might only need a new coat of paint and a general cleanup.

>>Check the floorplan before you buy

The kids have moved out, you’ve retired and now you can finally buy the property you’ve always wanted. Large airy rooms, a chef’s kitchen, and dramatic views from an exclusive vantage point on the cliffs have you signing on the dotted line within hours.  

Unfortunately, though, you overlooked all the steps leading up to your lofty perch, and just weeks after moving into your eyrie you’re beginning to have second thoughts. You’re not as young as you used to be and a simple task such as bringing home groceries is now tantamount to climbing Everest. Perhaps that ground floor apartment wasn’t such as bad idea after all…

Buyers often realise too late that a particular home – wonderful and well-priced as it may be - just doesn’t suit them or their lifestyle, says Harcourts Africa CEO Martin Schultheiss, who suggests that those who are viewing properties take all the time they need to “daydream” about living in a home before making any purchase decision.

“It is important to remember that different layouts suit different buyers. For example, parents with older children might prefer homes with some sort of ‘buffer zone’ between the master bedroom and their teenagers’ loud sound systems, but parents with toddlers will usually prefer homes where the bedrooms are all clustered together.

>>Bargain Buys at repossession auctions come with a host of extra costs

The number of buyers attending sheriff/liquidation/repossession auctions has increased exponentially since the onset of the recession, says Tony Clarke, MD of Rawson Properties.

“Two years ago such sales attracted only three or four cautious buyers – if the auctioneer was lucky.  Today they can be attended by 20 to 30.”

This, said Clarke, is due to the perception that, in today’s market, it is likely that the shrewd buyer may be able to pick up a real bargain.

But, he warns, this type of buying can be beset with difficulties and, especially in the property field, can be accompanied by a whole range of extra costs.

“At many of the repossessed properties sales which I have attended, the home is in a shocking state as there has been no money available for repairs.  The owner or tenant has all too often totally neglected the upkeep.  Geysers, electrical wiring, sewerage systems, window frames, woodwork and roofing are all falling apart.  Often, too, where repairs have been done, they have been carried out with shoddy replacement materials and poor workmanship.”

>> Today's Cape Property Developers batting on a very difficult wicket

Residential property developers today face a whole new set of challenges, says Paul Henry, Managing Director of Rawson Developers/Construction – and, he adds, the net result has been to curtail very drastically the number of projects coming onto the market.

“In the past,” said Henry, “the developer bought a tract of land, or an old building, attended to the zoning requirements, and then went to the bank for finance.  Depending on his track record and reputation, the bank would then advance up to 100% of the sum needed and would probably stipulate that 70% of the units had to be sold before the funds would become available – and that was it.  The developer could then start selling, achieve his target sales (in most cases), confirm the appointments of a professional team and get his builder started.

“In today's difficult economic climate there much development land available, but no take up.  Banks are now risk adverse and reluctant to finance developers – and the problem is heightened by the fact that once land has been acquired the developer has to design a product that will sell.

“In today’s market, that is not easy because the developer’s product has to compete with what is available on the second-hand market, where prices can be 20% to 30% lower.


>> To the editor

South Africans face other economic challenges with the result that the cut in the interest rates is to have a mute effect on the property market. Do you agree? This was our question to you the reader last week. 55% of our readers agree with this statement.

Some of the answers we received;

I do agree but at least the interest cuts that we’ve had it is a good start to recovery

The interest rate cut will for sure help with the recovery of the property market. We might not see it right now but for sure it will have a positive effect

Will we not always find something to blame if things are going bad? Other economic challenges, what will they be? First the poor performance of the rand, then the high interest rates, what’s next?

Send us your comments to news@cyberprop.com



Recent property press comment has possibly given the impression that the latest 1% drop in the interest rate marks a turning point in the fortunes of the Cape’s residential property sector – but this view is a little optimistic, says Ivan Neethling, Chairman of the Western Cape Institute of Estate Agents.

Neethling said that he sides with those economic commentators who believe that the SA Reserve Bank has almost always acted too late and too conservatively.

“We are now in a full-scale recession,” he said, “and if this is to be countered we should be taking radical measures to stimulate the economy.  A 1% interest rate drop can hardly be described as radical – a further 2% or more drop in interest rates together with other stimulus tools might have had the desired effect, especially if it had been put through two months ago.”

Neethling commented that “the more one sees what is happening in the economy, the more it becomes clear that government and the business sector are worlds apart, operating from two divergent viewpoints.”

“Business sees job creation as vital now – but every month more jobs are being shed – and the situation is not helped by an influx of foreign nationals who often have education and skills that our people lack.  They are able to corner the job market in certain sectors.

>> In the area...

The areas we are going to take a closer look at this week are;

  • Doornfontein
  • Cape Town CBD
>> In the area 1 – Doornfontein

The modernised, R77-million Doornfontein station in Johannesburg was officially opened on Thursday, said the Passenger Rail Agency of South Africa.

"The unveiling of Doornfontein station is an important milestone in our massive capital programme leading to 2010," Prasa chief executive officer Tshepo Lucky Montana said in a statement.

The upgraded station boasts modern facilities such as shelter from inclement weather and increased seating facilities.

>> In the area 2 – Cape Town CBD

It’s been 10 years since the 'rebirth' of Cape Town’s Central City as a residential zone got underway. And although the historic facades of the area may have remained largely unchanged — albeit cleaned up — the profile of buyers has certainly shifted.

"When the residential revamp started," says Laurie Wener, Pam Golding Properties MD for the Western Cape metro region, "more than 60 percent of buyers in the area were investors. Today there are far more owner-residents who enjoy the hip cosmopolitan lifestyle on offer and who have realised that the city is a safe, convenient and affordable place to live. It is also hugely popular with holidaymakers and visiting businesspeople, creating a vibrant rental market which is particularly active amid current market conditions."

>> Focus on Paarl, Western Cape, South Africa

Paarl, Western Cape, South Africa

The historical village of Paarl offers you historical sites, cultural museums, wine routes, buildings and companies of interest, special attractions and places of interest, accommodation and much more.

>> View Properties in Paarl/Western Cape
>> View Properties in Western Cape

>> Property of the week

Paarl, Western Cape

Bedrooms: 5
Bathrooms: 5
Garages: 2

Search for property in your area

Enter City/Suburb:
>> Course On Real Estate Finance

The UCT Graduate School of Business (GSB) will this August launch a landmark course to help South Africa’s investment and finance managers to make more informed decisions about real estate.

The course, offered by the UCT GSB Executive Education unit, is the first of its kind to be offered in South Africa and will enable managers to better determine the respective costs of capital for residential, commercial, industrial and retail real estate.

Drawing on groundbreaking research conducted across three continents – North America, Europe and Africa – the course will assist managers to reframe and test the assumptions that they hold when making investment decisions about property valuations.

According to Jali Bakoro, director of the new UCT GSB course Real Estate Finance and Securities and founder and CEO of Bakoro Capital Management, the challenge in South Africa is that some participants in the real estate market are not sufficiently qualified to help determine the true cost of capital in real estate.

“Currently the investment managers of big life and pension funds and bank finance managers depend on very stale valuations that are provided for on an aggregated basis – certain commercial or residential decisions are better served if one gets disaggregated (unique) property data.

“Many valuations depict as the future old inherent data which in most cases is also misrepresented. Issues of moral hazard and asymmetric information by the local valuers can also crop up, as some valuers give valuations that are not real but are made to suit certain client needs,” said Bakoro.

He said the UCT GSB course is directed at managers and decision-makers at banks, insurance companies, asset management companies, property funds (listed and unlisted) who are involved in investment property analysis and valuations.

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  • Keep track of your On Show and On Special properties and list them on your website
  • Print and email multiple reports
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  • Keep a history database

If you would like to know more about the above features and benefits that CyberAgent offer, visit: www.cyberagent.co.za or email: sales@cyberprop.com

For Sale Property:
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Gauteng Kwazulu Natal North West Western Cape