About Me

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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
 
Please visit our website at www.prop-law.co.za for more details.
 
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
 
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.

31 August 2011

Offices stand empty

Offices stand empty

In my previous posting, I highlighted Liberty's new Sandton property. If you go back through my postings you will see news about several of South Africa's biggest companies (e.g. Old Mutual, Standard Bank and others) building massive new office blocks in Sandton.

This is in addition to the major corporations that have already moved there, including the Johannesburg Stock Exchange.

This report deals with vacancies in the Johannesburg CBD. The trend is clear but is it reversable?

Gareth Shepperson

Special Report Podcast: Mel Urdang - director: retail, Liberty Properties - Boardroom Talk with Alec Hogg | Moneyweb

Special Report Podcast: Mel Urdang - director: retail, Liberty Properties - Boardroom Talk with Alec Hogg Moneyweb

Liberty’s R1.7bn Sandton City investment and property shares to invest in.

29 August 2011

ConCourt dismisses bid on compensation

ConCourt dismisses bid on compensation

The Constitutional Court did not agree with a KwaZulu-Natal family trust that the amount and time of compensation must be settled before their land was expropriated, in a judgment handed down in Johannesburg on Thursday.

The matter related to properties along the Umgeni River which flows through parts of Durban.

When notice of expropriation in order to canalise the river was received in 2004, Mohammed Yusuf Haffajee and others did not formally object.

They were willing to vacate the property but wanted to enter into a private treaty.

The expropriation date was set by the municipality for July 31 2005 without an agreement on compensation having been reached.

The eThekwini municipality had tendered a compensation amount but it was rejected.

The city believed that compensation and expropriation were separate, and that a disagreement on compensation did not invalidate expropriation.

The applicants insisted that expropriation could not take place until the amount of compensation had been determined.

An eviction order against them was granted by the High Court in Durban and the land owners appealed this on the grounds that expropriation before settling the compensation issue was unconstitutional.

They believed that under the property clause in Section 25 of the Constitution, determining the amount and time of the compensation was a prerequisite.

Leave to appeal was refused in the High Court and the Supreme Court of Appeal.

They then applied for leave to appeal at the Constitutional Court, but the court found that although there would be times where it would be unjust to evict people before determining compensation, like cases where people could lose their livelihood or homes, there were also cases where this would not be possible.

Urgent evacuation ahead of natural disasters would be an example.

An inflexible requirement for compensation before expropriation would therefore be against Section 25(3) of the Constitution that the amount and time of compensation must be a balance between the public interest and the interests of those affected by expropriation.

Therefore, Section 25(2) of the Constitution did not require that the amount and time of compensation and payment must always be determined before expropriation.

The court said this determination would generally be just and equitable, but where it had to be done after expropriation, it should be done as soon as was reasonably possible.

Eviction following expropriation cannot take place without agreement between the parties, the judges continued, and if there is no agreement, then this must be done under court supervision.

In disputed cases of eviction, the courts must ensure a just and equitable outcome in line with Section 26, which protects the right of access to housing.

The court allowed the application for leave to appeal, but the appeal itself was dismissed with each party ordered to pay their own costs.

Questions to ask when buying into a sectional title scheme - Property | Moneyweb

Questions to ask when buying into a sectional title scheme - Property Moneyweb

25 August 2011

R580m inner-city property development for Cape Town

R580m inner-city property development for Cape Town


A massive R580 million development, including flats, parking and retail space within walking distance of Parliament, is set to change the face of the Cape Town city centre.

Investment and property development company Eurocape's plans for the first phase include 9 900m² of retail space and parking.

The development, in Roeland Street and sections of Hope Street, includes the building housing Equal Education's Bookery and may have a supermarket as an anchor tenant.

This is the latest in a series of major city centre developments and comes as the national Department of Public Works is demolishing eight buildings in the vicinity of Parliament to create short-term parking for parliamentary staff.

The first phase would cost more than R216m, including the land, and the cost of all phases would be R580m, said Simphiwe Mathebula, Eurocape's sales and marketing manager.

Plans for phase one were at an advanced stage and planning approvals were in place, he said.

"Tenants for more than 40 percent of the retail space have been secured. As soon as the balance has been secured, ground breaking will commence."

Phase two would include 100 flats for "young city workers" while the third phase could include more flats or offices.

The development was expected to be completed in 2013.

Public Works spokesman Thami Mchunu said the eight buildings around Parliament, which are being demolished at a cost of R11m, would be replaced by surface parking for parliamentary staff in the short term.

In the long term it would be an extension to the parliamentary precinct which could include offices.

In 2009 it was reported that housing for MPs also formed part of Eurocape's plans.

Mathebula said this might be included in phase three.

Plans for MP accommodation in the precinct depended on funding and approvals, said Mchunu.

Demolition was expected to be completed in November.

The Cape Argus recently reported that a 32-storey skyscraper, which would be the city's tallest, was also expected to be completed by the end of 2013, and would accommodate about 3 000 people.

The R1.6 billion Portside building will be between Buitengracht, Hans Strijdom Avenue and Bree and Mechau streets.

It is the biggest commercial building project in the city since Safmarine House was built in 1993.

Michael Bagraim, president of the Cape Chamber of Commerce and Industry, said the Eurocape and Portside developments showed "people have faith in the economy. Our city is making a comeback".

In April the Weekend Argus reported there were plans for the regeneration of six city precincts.

Public Works and Transport MEC Robin Carlisle said at the time these were the Artscape, Somerset, Prestwich Street, Government and Garage precincts and the area around Oude Molen, which would be named the Two Rivers Urban Park.

The Artscape Precinct would involve the expansion of the Cape Town International Convention Centre and the area around the theatre, and raising the Artscape Garden to freeway level, allowing for parking underneath.

The R4.5bn project would turn the area into a 24-hour entertainment zone, with coffee shops and about 30 000m 2 of retail space.

Plans for the Somerset Precinct, around Somerset Hospital, have not yet been finalised.

The plan for the Prestwich Street Precinct was to link the city with the V&A Waterfront via a pedestrian route similar to the fan mile between the CBD and Green Point for the Soccer World Cup.

The Government Precinct would centre on provincial government-owned buildings such as those in Dorp Street and the provincial administration building in Wale Street. Changes would include one main entrance to government buildings beneath the arches in Keerom Street, while a high-rise is to be built on the corner of Loop and Leeuwen streets to house government departments.

The Government Precinct comprises land in the Buitenkant, Mill, Hope and Roeland street areas. The government garage will move to the old abattoir site at Maitland, along with the ambulance depot, freeing up valuable land. Entrylevel housing is part of the plan.

The urban park around Oude Molen and the Valkenberg psychiatric hospital will be the base for a hi-tech medical park.

Allan Gray to relocate HQ to V&A Waterfront

Allan Gray to relocate HQ to V&A Waterfront

JSE-listed Growthpoint says it has committed R684m for a new development on the landmark V&A Waterfront with investment management firm, Allan Gray, as an anchor tenant.

In June 2011 the company took transfer of 50% of the Waterfront in Cape Town in a R4.9bn deal which has been described as one of the country’s largest property transactions yet. The Allan Gray headquarters will fall within the Clock Tower/Silo Square precinct and is expected to be ready for occupation in April 2013. A development blueprint is in the process of being put together with work scheduled to begin In September 2011. A retail component is on spec to cater for the Allan Gray staff.

CEO Nortbert Sasse says the property company’s long-term expectations for the V&A are for superior returns generated by completing all development opportunities. He also mentioned that the debt-funded Waterfront transaction took Growthpoint’s borrowings from R9.3bn to R14.3bn, increasing the company’s loan-to-value ratio from 29.9% to 37.8%. Growthpoint has a portfolio of 424 directly owned properties in South Africa valued at R32.5bn, it also owns 37 properties in Australia valued at R6.4bn and bought the V&A at a cost of R4.9bn.

In its annual results presentation, the property giant said it had posted an 8.1% rise in distributions to 131c per linked investment unit in the year ended June, compared with the previous financial year. Growthpoint Properties says given the global and economic uncertainties, higher interest margins on debt refinance and other pressures, it expects to show positive growth in distribution of between 3% and 7% in the next financial year.

CEO Norbert Sasse has attributed its performance to aggressive property management, vigilant control of arrears, fortified portfolio occupancy levels and the distribution enhancing performance of Growthpoint Properties Australia (GOZ) in which Growthpoint has a 61% holding.

With regards to its investment in Australia, Sasse says the venture continues to perform positively with the strong Australian dollar providing an additional boost to the company’s distributions. Its total return over the past year has amounted to 28.6% made up of an income return of 11.4% and a capital return of 17.2%. GOZ has acquired 15 properties during the year, bringing its total number of properties to 37 across Australia and increasing the value of the GOZ portfolio to just more than Aus$1bn. The portfolio there has gone from purely industrial properties to include a 28% spread of offices at year end.

Sasse says at a level of 7.4%, tenant arrears as a percentage of total monthly collectables have been successfully cut by Growthpoint to levels prior to the 2008/2009 global financial crisis. He added the company’s portfolio occupancy had strengthened during the year, with the overall vacancy level coming down from 6.4% to 5%. “The successful cutbacks in vacancies has been balanced against lacklustre demand, particularly for office space, in the context of a gruelling economic climate with low GDP growth and increasing unemployment figures,” Sasse said. He added that clients were generally seeking shorter leases, reflecting uncertainty on the outlook of the South African and global economies.

Bonitas curators to auction scheme`s `investment` properties

Bonitas curators to auction scheme`s `investment` properties

24 August 2011

'Time to stop bad-mouthing the property market'

'Time to stop bad-mouthing the property market'

'Time to stop bad-mouthing the property market'


"Ongoing - and mostly unfounded - pessimism in the residential property market is threatening to become self-fulfilling prophecy."

So says Berry Everitt, MD of the Chas Everitt International property group, who notes: "The truth is that there are a great many positive indicators for property at the moment, and our industry as well as the banks and the economists should be doing more to reinforce and underline these in order to strengthen the recovery."

Writing in the Property Signposts newsletter, he says: "The truth is that home prices are rising again and while the average increase may not yet match inflation, more activity in the market and more sales will take care of that.

"What is more, it is important to communicate the fact that those who buy now before prices really start escalating are making a good move, for two reasons, the first being that they are getting more house for their money and the second that they are putting themselves in a position to make greater returns on their investments than if they wait until later in the property cycle to buy.

"Just ask anyone who bought in 2004 at the beginning of the last property boom, instead of waiting until 2007, when prices - and thus the costs of entering the market - were already sky-high."

Meanwhile, Everitt says, he is encouraged by the fact that sales volumes in most of his group's offices are substantially up on this time last year - and that the average time it is taking them to sell a well-priced home is down to around 10 to 12 weeks, a far cry from the average 20 to 24 weeks two years ago.

"To a large extent, this is because prospective buyers are generally in much better financial shape than they were two years ago, and thus better qualified to obtain home loans. Many debt defaults have been addressed and sorted out, household income levels are up and the average debt-to-income ratio has dropped below 77%, it's lowest level since the end of 2006."

And perhaps in recognition of this, he says, the banks have definitely been granting more loan approvals for the past few months.

"Consequently, I really think it is time now to let the August winds blow away any negativity, stop sitting on the fence and get involved in the market with a positive attitude. We have it in our power to create our own 'happy ending' instead of allowing the doomsayers to talk us into disaster."

23 August 2011

Property News Gauteng: Increasing number of young expats returning to SA

Property News Gauteng: Increasing number of young expats returning to SA: Extreme weather conditions and geological events in many parts of the world this year, as well as prolonged political protests, huge financi...

22 August 2011

Residential fixed investment hit by the lagged impact of the recession

Residential fixed investment hit by the lagged impact of the recession

The FNB Estate Agent Survey provides evidence to this effect.

Residential fixed investment has been hard hit in recent years by the lagged impact of the 2008 recession and residential property market slowdown, which in turn was caused by a global recession along with significant interest rate hiking from 2006 to 2008.

The decline in overall residential fixed investment started back in 2007, and has continued unabated up until early in 2011, according to the Reserve Bank’s (SARB) data. It is not only new building activity that has suffered but the additions and alterations market too, and sometimes even home maintenance has fallen short.

The FNB Estate Agent Survey provides evidence to this effect. The sample of agents has been of the opinion that, since the start of the survey back in 2004, there has been a broad decline in the percentage of home owners undertaking “value-adding upgrades” or “maintaining and making some improvements” on their homes. From 79.5% of total estimated homeowners in early-2004, agents see homeowners falling into these 2 categories of home investment as having declined to 41.5% of total homeowners in their areas.

This implies a major shift by a significant portion of homeowners towards “lesser forms” of home investment, namely “fully maintaining with no improvements”, “only attending to basic maintenance” and ”letting homes get run down”.

This is reflective of tough economic times as well as an ongoing obsession with consumption, by households, in order to maintain their material lifestyle in the short term. This propensity to consume can be seen in the SARB numbers, where saving is so low that households remain in a situation of “net dis-saving”, i.e. where the little gross saving that exists is insufficient to cover the depreciation on fixed assets owned by households. In the 1st quarter of 2011, the SARB reports that real household consumption expenditure grew year-on-year by 5%, higher than real disposable income growth in the same quarter, while residential fixed investment was the victim of the need to trim expenditure, declining year-on-year by -4.9% in real terms.,

Not only did home investment/upgrades suffer, but building of new homes has also been reduced greatly. From the peak of building completions at the end of 2005, square metres completed had dropped by -57.4% by the 2nd quarter of 2011.

However, there is some sign of stabilization at these lower levels of building activity. In the 2nd quarter of 2011, square metres of residential buildings completed were only marginally down year-on-year by -3.2%, after far greater drops in earlier quarters. Interest rates remain low, existing residential demand has picked up since the lows of 2008/9, and one would expect building activity to respond positively to these events with a lag. However, we expect stabilization and very low growth in completions at best in 2012, as the household sector remains financially stressed, supply overhangs in many existing markets remain, and existing home bargains are still to be found. On top of this, estimated replacement costs of homes are on average 21.7 higher than existing home prices. Therefore, after a projected -0.8% slight decline for 2011 as a whole, we forecast a mild +2.4% growth rate in square metres of residential buildings completed for 2012 as a whole.

In addition, economic growth slowdown is at hand, and the risk of a 2nd global recession is significant. Under those conditions, we would expect any residential building sector growth to run out of steam towards the latter stage of 2012.

The relative bright spot is expected to be the Affordable Housing Market, which we think should be the key driver of any building activity growth that may take place, having been the least oversupplied market following the property boom.

___________________________

You can view the FULL REPORT here.

Gareth


Valuation of Property

Valuing of property

It is essential to understand how banks go about property valuations.
The property media have done an excellent job in educating and informing the general public on property matters and their increased knowledge has become apparent in the questions they put to agents and the requests they regularly make for carefully researched information to back up the agent’s statements.

Nevertheless many surprising “patches of ignorance” still exist – one of which concerns the valuing of property.

South African valuers operate to international standards, but this does not mean that all valuations will be the same or be what the agent, seller or buyer feel they should be.

The most important fact to grasp is that the bank valuer is there to assess how the property rates in relation to the price being paid for it, i.e. how much security its value offers the bank.

A valuer is not there to check on the physical state of the property or what parts of it need repair.

Bank and other valuers use a number of tools to do a market related price valuation, one of which will be a Comparative Market Analysis. This tries to fix a realistic value for the home by comparing it to similar properties in the area that have sold recently.

CMAs are, of course, an inexact science because no two homes are the same, even when they have the same designs and are in the same estate. In particular, the condition of one home may be very different from that of another – its defects, or lack of them – should lead to a different valuation but often do not.

Where a property has obvious defects, but the valuer feels that the valuation can be reached if these are fixed, valuers may take cognisance of such defects by calculating what it would cost to repair them and inserting a retention clause stipulating that specialised repairs have to be carried out before the Bond can be registered.

Municipal valuations can be useful guidelines, provided it is accepted that these days they are often far higher (as much as 20%) than the market value – the aim of the municipalities being to increase their rates and taxes.

Another guideline in establishing a fair valuation may be the insurance value – but as this will take into account the cost of replacing the home, it, too, will probably be high because, in today’s market, building a new home is 20 to 30% more expensive than buying one “second hand”.

Valuations become exceptionally important when a buyer is applying for a bond. Quite often the bond applicant will, possibly on his estate agent’s advice, make an offer only to find that the banks’ valuers see the property as being considerably less. The bank will then be prepared to issue a bond only in relation to their valuation.

In these cases if market value is not found, a good bond originator may be able to persuade the bank that their valuation is not market related or he may be able to get the buyer and seller to rectify defects which will make the higher valuation valid.

It has to be understood that a home may have certain features (e.g. proximity to a school or an especially attractive garden) which give it huge value for some buyers but might reduce its appeal to other buyers.

In a willing buyer, willing seller market, where a bank does not find value, we always suggest that the valuer meets with the estate agent selling the property and have a relook at the comparative market analysis and decide what it is about this property that detracts from the value as calculated by the valuer.

This will enable the agent to find out what the bank thinks should be changed or improved before they will consider granting the loan and often matters can then be put right.

*Rob Lawrence is the National Manager of Rawson Finance, the Bond Originators for the Rawson Group.

19 August 2011

Home owners holding on to property for longer

Home owners holding on to property for longer

A recent property survey has indicated that home owners in Gauteng and the Western Cape are holding on to their assets for longer, hoping to realise higher prices in the residential market.

Property giant, Lightstone’s Andrew Watt says home owners in these provinces have waited roughly six years before disposing of their property, but this waiting period seems to have increased to eight years, with the exception of KwaZulu-Natal. What has also emerged is a spike in house prices in the Eastern Cape over the past few months, but Watt says it is too early to speculate on the reason for this.

Watt says house price inflation remains relatively muted although it is still positive with the affordable market remaining the pick of the value segments. Recent statistics gauging property price growth over the mid to long term, have shown the top performing luxury suburbs were, not surprisingly, in the Western Cape.

The top performer in this sector was La Pastorale suburb in Stellenbosch, followed by Zwavelpoort and Westcliff in Gauteng. Other top Western Cape performers included Kalk Bay, Mostertsdrift, Sunset Beach, Scarborough and Murdock Valley. This luxury sector includes residential properties from R1.5m and more.

In the high value band, meaning houses ranging from between R750 000 to the R1.5m mark, the picture is remarkably different and features suburbs from the Western and Northern Cape, Limpopo, Mpumalanga, the Free State and KwaZulu-Natal.

A presentation at a Rode 2011 conference in Johannesburg showed that the top performing Eastern Cape suburbs over the past 15 years were found mostly in Nelson Mandela Bay, followed by Kouga, Buffalo City and Baviaans. The equivalent in the Western Cape was the city of Cape Town, George, Swellendam, Oudtshoorn, the Breede River Winelands, Witzenberg and the Cederberg.

What also emerged during the Lighthouse presentation was that over 80% of foreign owned properties in South Africa were valued under R3m which indicates that ownership is not limited only to the very top end of the market which accounts for roughly 5% of foreign ownership. As far as ownership in the provinces is concerned, the Western Cape historically and currently leads the pack, followed by Gauteng, KwaZulu-Natal and the Eastern Cape with the other provinces trailing behind. The province that has least piqued the interest of foreign ownership is the Northern Cape with its harsh climate.

Investec to salvage sour loans

Investec to salvage sour loans

Investec has won a provisional liquidation order for about five Pinnacle Point Group (JSE:PNG) subsidiaries for which liquidators are expected to be appointed by the Master of the High Court by next week, lawyers for the specialist bank told Moneyweb.

Investec’s lawyer Leonard Katz from Edward Nathan Sonnenbergs (ENS) said the liquidation was granted by the Western Cape High Court. ENS said the properties under provisional liquidation are: Festival Bay Trading 55 Pty Ltd, Pinnacle Point Resorts Pty Ltd, Pinnacle Point Investment PTY Ltd, Clarence Golf and Trout Estate, Eagle Creek and Property Promotions and Management (PPM).

Investec is collectively owed close to R115m by Pinnacle Point subsidiaries. A source close to Pinnacle Point Group confirmed the provisional liquidation was granted on Thursday, but does not include PPM.

“The liquidators will immediately commence the investigations and they will try and start to find buyers for the assets,” Katz said.

Pinnacle Point Group is currently under a business rescue. But the underlying assets that have been placed under provisional liquidation are not part of it.

The business rescue practitioner, Mike Lane, said he would not comment on the provisional liquidation.

18 August 2011

First-time property buyers spending more : Property News from IOLProperty

First-time property buyers spending more : Property News from IOLProperty

First-time house buyers are spending more on a property than they did a year ago, according to bond originator ooba on Wednesday.

The July first-time buyer's purchase price figures show year-on-year growth of three percent to R609,417 ooba said in a statement.

"Higher levels of activity amongst first time buyers are generally a positive indicator for the housing market, as demand increases and there are positive knock-on effects," said Rhys Dyer, ooba chief operating officer.

He said the average first time buyer's purchase price had grown consistently in the past quarter, due to low interest rates and an easing of lending conditions, especially for deposit requirements.

However, the overall price index recorded negative year-on-year price growth of 3.4 percent to R821,579 in July 2011 from R850,763

in July 2010.

Forty-nine percent of home loan applications finalised by ooba from January to July 2011 were for first time home buyers, which was up two percent from the same period last year.

There had been an almost one percent increase in the average approved bond size to R702,072 in July from R696,903 a year ago.

The average deposit had decreased by 20 percent to R119,507 and was now equivalent to 15 percent of the purchase price.

This was a sign of banks' improved lending appetite, said Dyer.

The average bank decline ratio at 47 percent and the effective approval rate of 64 percent were at similar levels to the June 2011 numbers, indicating little month-on-month change in bank approval rates.

Dyer said that in July, the ratio of applications declined by one lender, but granted by another stayed at 23 percent.

Investec Property Fund to bulk up on Retail

Investec Property Fund to bulk up on Retail

Investec Property Fund is looking at bulking up on retail property as it remains underweight in that sector. It also has ambitions to include the Firs and Hyatt Regency, in Rosebank, in its portfolio and believes these properties will benefit from the good transport infrastructure of the Gautrain, thus boosting the listed fund.

Sam Leon, the CEO of the R1.7bn Investec Property Fund, said the objective is to get to a fighting weight which is somewhere between R7bn and R10bn over time. However he could not put a timeframe saying it was not easy as the company would not bulk up for the sake of bulking. However, Leon concedes that the fund is underweight in retail.

“It is illogical that we’re clearly underweight retail with under 10% of GLA (gross leasable area). We are looking to create the right retail product and then we will put it in the fund. But again it’s not for the sake of getting retail it’s for the sake of getting good property. So we are looking to bulk up on the retail side,” Leon said.

“One of the potential products that could go into the fund at the appropriate time once it’s bedded down is the Firs [complex] in Rosebank ... It’s not yet offered to the fund that is something in the pipeline ... It clearly has the quality that we would like to see in the fund ... Good transport infrastructure works and has a [good] impact for real estate.”

Investec Property owns the Firs shopping centre, offices and The Hyatt hotel, but it is not yet included in the listed fund. Leon said in terms of the gross leasable area, the fund was 65% industrial, 25% offices and about 10% retail. By revenue the fund is 40% industrial and 50% office.

“Our office portfolio as we currently stand is very defensive. We have got Woolworths with a long term lease in excess of ten years, which is their head-office and Investec’s regional office in [Umhlanga in Durban] in excess of ten years ... So in this case the offices are very defensive because of the type of tenancy and the length of the lease.”

Leon added that the fund has been fairly stable since it listed in April. It has previously said that it aims to provide a dividend yield of 9.5%. Investec’s Property Fund debuted at R10.60 in April. On Wednesday it closed flat at R10.30.

17 August 2011

Home loan interest rates 'already higher'

Home loan interest rates 'already higher' : Property News from IOLProperty


"In recent months we have seen a significant decrease in the rate concessions that banks are willing to give clients, from as much as 1,5% off prime to virtually nothing."


"In other words, home loan interest rates are already effectively higher for many borrowers, even though the Reserve Bank has not yet officially raised interest rates."

Zoning Certificates: Developers beware

Zoning Certificates: Developers beware

Court warns developers not to rely on local authorities to know the correct zoning of their property.
The KwaZulu Natal High Court in Eagle Creek Investment 138 (Pty) Ltd v Hibiscus Coast Municipality and Another [2010] ZAKZDHC 24 (16 July 2010) gave developers an unusual warning. The court in its decision warned developers not to rely on local authorities to know the correct zoning of their property.

In terms of the facts in the matter, the developer obtained a written zoning certificate from the municipality which stated that its property was zoned "General Commercial 2". On the strength of the information contained in the zoning certificate, the developer prepared and lodged building plans with the municipality for the construction of a motor vehicle dealership on the property. The municipality approved the plans and the developer commenced construction of the dealership.

The owners of the neighbouring properties lodged objections against the construction of the dealership. The municipality then decided that the property was in fact zoned "Limited Commercial" which meant that the plans could not have been approved. The municipality reasoned that it had relied incorrectly on zoning maps drawn for it by a third party. The municipality accordingly demanded that the developer cease construction of the dealership immediately. Two months later the municipality did an about turn and withdrew the "stop work" order allowing the developer to continue with its construction.

The owners of the neighbouring properties subsequently made an application to court and were granted an interdict halting construction. The court agreed with the neighbours in its finding and held that the property was indeed zoned "Limited Commercial" and therefore set aside the approval of the building plans.

As a result, the contractor sued the municipality for R1,018,079.64 (one million eighteen thousand and seventy nine rand and sixty four cents), which it claimed it had suffered as damages.

In its defence, the municipality claimed it was immune from claims of damages arising from the negligent exercise of its statutory duties.

Unfortunately for the developer, the court upheld the municipality's defence on the basis that the municipality enjoyed immunity in terms of the local (KZN) Ordinance.

Accordingly, developers must do their own homework in respect of establishing the zoning of their properties to ensure that such properties are appropriately zoned. Further, if developers do run into any problems it is advisable to obtain legal advice promptly.

First signs of a swing by investors back to sectional title property

First signs of a swing by investors back to sectional title property

With the stock markets dropping 15% in two weeks – then bouncing back, only to drop and rise again, manufacturing and mining output down, and with major SA corporations cutting staff, there has just recently been a discernible swing back to sectional title property.

16 August 2011

Emigration property selling at three-year low

Emigration property selling at three-year low

It must be remembered that expats buying property in South Africa don’t always do so with a view to returning permanently. “Nevertheless, we assume that this is a partial indicator of skills returning or intending to return.”

Is property geared for a slump?

Is property geared for a slump?

According to FNB’s report, “economic data releases and events lead to the belief that we could see increased pressure on the market in the near term.”

15 August 2011

Global office rentals on the mend.

Global office rentals on the mend

While global office rents increased 4.3% year-on-year in the first quarter of 2011, according to CB Richard Ellis’s Q1 2011 Global Office MarketView, rentals in South Africa have remained stable, Broll Property Group reports.

South Africa is currently a tenants’ market. Landlords are willing to look at favourable deals to retain tenants, but South Africa’s rentals are on par with international trends. We face the same challenges. Unemployment is rising and companies are downsizing and consolidating to ensure their future. Obviously, that affects their property requirements.

The South African property market lags behind the EMEA market by 12 to 18 months.

Old Mutual’s R20bn town centre development

Old Mutual’s R20bn town centre development


Old Mutual says it is working on a R20bn town centre in Midrand Johannesburg and among other separate initiatives it is looking at investing close to R2bn in expanding the Menlyn shopping centre in Pretoria next year.

13 August 2011

Property vs Equities (and Bonds)

Special Report Podcast: Paul Stewart – MD, Plexus Asset Management - Boardroom Talk with Alec Hogg

It is interesting that Moneyweb have chosen to go with the sub-heading "We are closer to the period of time when property perhaps underperforms for a period of time".

This heading is a little misleading as to the contents of the Podcast. If you look at the transcript, it is clear that historically property has outperformed equities and bonds and tends to rise with a rise in either of these sectors, thereby "enjoying the best of both worlds".

The question is therefore posed as to whether such performance is sustainable. I say - History repeats itself and therfore Property should be an important part of any long-term strategy.

Gareth Shepperson

12 August 2011

Continuing Saga of Pickvest, PIC, Sharemax, etc.

Asset management boss in R1.2bn fight with property billionaire - Special investigations | Moneyweb

Prieur du Plessis, the founder and executive chairman of Plexus Asset Management, appears in a R1.2bn battle with the Georgiou family. Regular readers will be familiar with apparent billionaire Nic Georgiou’s involvement in troubled syndication scheme Pickvest (formerly PIC Syndications).

SA’s only office dominated property portfolio lists

SA’s only office dominated property portfolio lists

Vunani Property Investment Fund listed on the Johannesburg Stock Exchange (JSE) in a week where eight of the 11 initial public offerings due to take place on US markets were cancelled and one slashed its deal size in order to get the transaction done.

10 August 2011

Seller must keep in full touch with the transfer process

Seller must keep in full touch with the transfer process

I have posted this article from Moneyweb to remind all parties to a property deal (Sellers, Buyers & Agents) that the deal does not end when they sign the Offer to Purchase and that therefore, neither should their involvement.

We send out detailed and comprehensive weekly reports on all our Transfers, knowing full well that some parties may choose to ignore them. Everyone should remember that signing an Offer to Purchase is only the first step in a process that culminates in registration in the Deeds Office (and frequently goes beyond that).

We sometimes need to secure possession of a registered deed in a quicker time period than the Deeds Office usually takes to process it. We sometimes need to follow-up at municipalities for clients when the registration in the Deeds Office is not reflected in the Municipality's records. Our involvement therefore often goes beyond registration. The parties should also be involved until every last aspect is finalised.

We aim to be of service from start to finish and report to everyone on a weekly basis. This should be an invitation to all the parties to participate and actively engage in the process. Don't just sit back once the Offer is signed because we welcome your input.

Gareth Shepperson

Property market depressed not dead - Seeff - Property | Moneyweb

Property market depressed not dead - Seeff


"There is movement in the market, but this is lateral only as recovery continues to be affected by rising costs. Credit remains a significant stumbling block. There has been an increase in first time buyers as at the second quarter of this year, but according to FNB, still not enough to absorb the over-supply of stock."

New R650m development for Sandton

New R650m development for Sandton - Property


The multi-million rand ten-storey development will go up on the corners of West and Katherine streets in Sandton, opposite the Sandton Gautrain station. It is due for completion in 26 months’ time and will consist of eight stories of sectional title office units and seven rooftop penthouses. Of these, the smallest, at 223m², could cost you around R9m. The larger unit at 483m² will set you back by R18m.

Standard Bank`s new R1.6bn Rosebank building

Standard Bank`s new R1.6bn Rosebank building


Absa already spent R1.8bn on a new building, while Old Mutual is in a R3.8bn HQ project.

Standard Bank is building a new office development in Rosebank Johannesburg at a construction cost of R1.6bn, an initiative that the bank says will allow for consolidation of occupancies in leased premises in the greater Johannesburg area as well as for growth in staff numbers.