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.

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.

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.

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.”

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.