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.

19 December 2013

Plett Harbour development proposal divides property owners

Plett Harbour development proposal divides property owners

The row over the controversial R4 billion planned small boat harbour at Plettenberg Bay is hotting up after three-dimensional graphic renderings of the development started circulating through the region.

Plettenberg Bay beachfront as it currently appears.

This comes just weeks after the final scoping report for the 87 000 sqm development by Western Cape Marina Investments was released and highlighted major environmental and economic concerns. The project will stretch from the Piesang River estuary and along the town's popular central beach.

Durban wants mall developer jailed

Durban wants mall developer jailed

The eThekwini Municipality wants Ravi Jagadasan, whose company was building the Tongaat mall that collapsed, killing two people, to be jailed for contempt of court.

Alternatively the city is asking that Jagadasan, the son of businessman Jay Singh, pay a fine.

It has also asked the Durban High Court to impose a fine on Jagadasan's company, Rectangle Property Investments.

The contempt of court application was filed last week and has been set down for February.

Property price growth up, but below peak

Property price growth up, but below peak

House prices, adjusted to take into account the impact of inflation, have declined cumulatively by 20.1 percent since the real house price peak at the end of 2007 but are still 29.3 percent higher than in November 2003, according to FNB.

In nominal terms, house prices have grown by 14.7 percent since the end of 2007 and by 129.3 percent since November 2003.

The outlook for the residential property market for next year is for a continuation of low house price growth.

The latest FNB house price index revealed that nominal house prices increased by 7.2 percent year on year last month compared with the revised 7.1 percent in October.

Tshwane cracks whip on firms digging up roads

Tshwane cracks whip on firms digging up roads


Electronic communication companies and service providers that have become accustomed to free-for-all digging up and laying of cables in the public road reserve in Pretoria will find the going harder in the near future.

Roads are dug up in Mamelodi. Companies laying electronic cables next to roads, disrupting traffic.


The City of Tshwane has approved laws and regulations, more than a decade in the making, to control and co-ordinate the increasing volume and complexity of services in the road reserve.

13 December 2013

Joburg call centre under fire

Joburg call centre under fire

Only 4 percent of calls to the City of Joburg's call centre for water and electricity problems are answered within one and two minutes.

12 December 2013

Pretoria getting largest statue of Mandela

Pretoria getting largest statue of Mandela

It is 9m tall, weighs four tons and is said to be the largest statue of Nelson Mandela.



The bronze-coated artwork spent hours on the road travelling from Cape Town this week and arrived yesterday at the Union Buildings in Pretoria, where it is to be assembled and unveiled on Monday.

'This is the largest Mandela statue in the world and we believe it is the best,' said Sarah Haines of Koketso Growth, which managed the project.

'Higher incomes needed now to qualify for bonds'

'Higher incomes needed now to qualify for bonds'

According to the latest statistics from BetterBond Home Loans, home buyers in SA now need to earn a gross monthly income of around R30 000 to buy an average home costing some R952 000.

The BetterBond figures also show that 64 percent of buyers currently have to pay a deposit in order to secure a home loan, and that the average deposit required for a home priced at R952 000 is around R99 000 - or 10,4 percent

'This puts the average home loan required to buy such a home at R853 000, and the average monthly bond repayment at just over R7400,' says BetterBond CEO Shaun Rademeyer.'Now in the days before the National Credit Act, when the simple rule-of-thumb was that your monthly bond repayment should not exceed 30% of your gross salary, that would have meant that a gross salary of R24 700 was enough.

EAAB warns against 'false courses'

EAAB warns against 'false courses'

Annette Evans, regional manager for the Institute of Estate Agents, Western Cape, wishes to draw attention to a recent announcement by the Estate Agency Affairs Board regarding the Continuous Professional Development courses offered.

Various property courses are currently being presented by a number of educational bodies and are being presented as being CPD accredited, she said. What many are saying is that CPD points will be accrued in accordance with the EAAB's recommended cycle.

Historic inner Joburg suburbs set for densification

Please see the Article from the Star Newspaper below.

I was priviledged to be invited to a SAPOA dinner with Mayor Parks Tau as part of the representation of the Property Industry where the Corridors of Freedom were presented.

The attendees at the Dinner received information packs from the City of Joburg containing detailed information on the Corridors of Freedom.  You are welcome to contact me at gareth@propertylaw.onmicrosoft.com if you would like more information.

I have also posted on the Blog on a number of occassions that I believe that desification of South African cities is the ONLY viable way of dealing with infrastructure issues (especially transport).

Gareth Shepperson


Historic inner Joburg suburbs set for densification

Joburg's Empire/Perth road corridor is set for major densification as it becomes the second area identified as a 'corridor of freedom' by the city.



This has brought many objections from residents who claim they have not been consulted properly and are concerned that the high-density, multiple-storey housing which is to be built, will destroy the character of the historic suburbs.

10 December 2013

Durban North property owners worried by golf course plan

Durban North property owners worried by golf course plan

Worried Durban North homeowners have accused Durban Country Club trustees of using 'smoke-and-mirrors tactics' and failing to explain the full impact of a proposed housing development at the Beachwood Golf Course in the upmarket coastal suburb.

Last week, homeowners from Fairways - which flanks the seaside course - met to hear what progress had been made to clear up their concerns over a multimillion-rand housing plan mooted by the Durban Country Club earlier this year.

09 December 2013

Objections flood in over Pretoria mining plan

I doubt whether these objections will stop mining if the prospecting proves to be successful because I have not seen any objections that would outweigh the benefits of opening a new mine.

Gareth Shepperson

Objections flood in over Pretoria mining plan

Objections have continued to pour in as preparations gained momentum for commencement of mining activities in Doornpoort, just north of the N4.

The Pretoria News reported this week that the Department of Mineral Resources had awarded a fiveyear prospecting right on a property in Doornpoort, 10km north of the CBD, to Gemsbok Platinum (Pty) Ltd, a subsidiary of JSE-listed Sable Platinum (Pty) Ltd.

'Stalking' new trend in property market

CAN SOMEONE PLEASE EXPLAIN THIS TO ME???

What is Bill Rawson actually saying?  How is it that when a buyer/investor does a bit of homework and monitors property prices in a given area that it amounts to 'stalking'?

Surely it is only savvy business practice to monitor the market before ploughing your hard-earned funds into an investment as large as property?

Only fools rush in blindly ... don't they?

Also, in my experience, Sellers don't usually thumb-suck a selling price and are almost always guided by someone with knowledge of the market (i.e. their Agent) when determining a selling price.  It is then in the Agent's own interest (as well as their client's interest) to seek the highest price possible.

Economics 101 ... isn't it?


I really don't understand what Bill Rawson is advocating in this article.

Gareth Shepperson

'Stalking' new trend in property market

A new trend is now making itself felt in the South African residential property market: the 'stalking' of homes.

Housing invaders take over Singh's Durban flats

Housing invaders take over Singh's Durban flats

A Newlands West housing development has been invaded by hundreds of informal settlement residents taking over the 96 incomplete flats being built by Jay Singh.

Hundreds of squatters invaded this Newlands West development on Tuesday.

06 December 2013

FAREWELL NELSON MANDELA - THANK YOU

Nelson Mandela (1918 - 2013)

05 December 2013

R100m and more for Cape Town's trophy homes

The super-rich pay top prices on the Atlantic Seaboard.


Home theatres, gyms, wraparound views, infinity pools, floating gardens and massage areas feature in some of Cape Town’s trophy homes, perched on the edge of the Atlantic Seaboard.


An apartment sold to a Nigerian buyer for R28m two months ago. The apartment measures approx 300 square metres and is located on Moses Beach, Clifton

Included in this coterie of exclusive homes are those in South Africa’s wealthiest street: Nettleton Road in Clifton, where two properties are currently on the market for over R100 million each (both on Seeff’s books). The foreign seller of one of them has attached a $15 million price tag for the property, which includes a home theatre, an entertainment area, a gym, wraparound views of the 12 Apostles and the Atlantic Ocean, en suites, staff rooms and a bar.

Leading agents say the strip of around twenty homes on the road are guaranteed prices upwards of R30-R50 million. A plot in the street recently sold for R35 million – a cool R30 000 per square metre.

Property analyst for Absa Home Loans, Jacques du Toit, is not surprised at the price tags. “There will always be extremely wealthy people who will be able to buy these kind of properties, despite the economic conditions. The scarcity of land in that area will also continue to drive the prices up.”

A contemporary three-bedroomed apartment in Palgrave, one of the newest residential blocks at the V&A Waterfront. The unit has views over the marina, canals and mountains and is priced at R22 million.

It’s in this sweet spot of the Atlantic Seaboard – which includes Fresnaye, Clifton, Bantry Bay and Camps Bay - that you will encounter the greatest mix of local and foreign buyers. You could find yourself rubbing shoulders with the royal family of Qatar – or sharing the paths to the beach with local top executives and magnates from Nigeria.

Seeff says about 28% of its sales in the area are to foreign buyers, with about 10% from African countries such as Nigeria, Namibia, Mozambique, Zambia and Zimbabwe. Some elite properties were snapped up earlier this year.

 Fresnaye

Pam Golding recently sold a home at the top of exclusive Fresnaye to a buyer from the United Arab Emirates for R110 million - the biggest sale in the area to date. The Stefan Antoni-designed house boasted a media centre, playroom, infinity pool, gymnasium and fittings and finishes from around the world.

Closer to town, Nigerian commodities tycoon, Abdulsamad Rabiu, recently featured by Forbes Magazine as Africa’s latest billionaire, is the new owner of a penthouse at The One & Only at Cape Town’s V & Waterfront.

Many wealthy snowbirds have also flocked here from colder climes, often spending the summer in their Atlantic homes. Pam Golding still has South Africa’s most expensive property, the ‘Enigma Mansion’ on its books, with a price tag of R300 million.

The 7 000 square metre property in Camps Bay boasts a flamboyant mansion, which took several years to build. The German seller has seen some offers, but a deal has not yet been made. Pam Golding has also made two recent sales to Mozambican buyers, and a R28 million property sale at the exclusive ‘Eventide’ development to a Nigerian buyer.

Foreign buying on the Atlantic Seaboard was much higher than the national average of 3.5% of the total housing sales in South Africa in the third quarter of 2013, says John Loos, FNB household and property sector strategist. This was an increase from a 2% foreign buying low in late 2010 but still far from the high of 6.5% in 2008.

 Fresnaye


The squeezed upper echelons

While Seeff says its seen a 16% increase in sales activity on the Atlantic Seaboard this year, this doesn’t reflect the picture of sales in a slightly lower category.

Many South Africans in the upper income bracket have been squeezed by difficult economic times.

 Fresnaye

Loos says the property market in the R4 million to R6 million category was the weakest of all market segments in the third quarter. Du Toit believes with more economic stability in Europe and a weak rand, South African could attract more foreign buyers.

The weaker rand has made South African properties 30% cheaper in US dollar terms over the past year and a half. But Loos says the argument over the weak rand is questionable. “The weakness of the rand has made property a lot cheaper in foreign denomination terms, but it’s driven by poorer sentiment to South Africa. Poor sentiment could hamper investment."

He adds that property is also not as popular an investment as it used to be and that foreign buyers have not come back in as strong numbers as they did in the pre-recession days.

Still, with the summer festive season nearly upon us, estate agents are gearing up for some intense bling property browsing in Cape Town this season. Seeff’s Atlantic Seaboard luxury market specialist, Lance Cohen, views November as an excellent sales month. He says in December sales are generally good, although many people take their time house-hunting and window-shopping rather than clinching a deal.

The festive season is followed by the traditionally excellent sales months of January, February and March. So it seems that for the narrow band that makes up Cape Town’s sunset strip, high prices may be the one constant. With little or no more land to develop, homeowners can afford to relax, sip their cocktails and enjoy the view.

 Fresnaye




The original article was posted on
MONEYWEB

Platinum mines proposed for the outskirts of Pretoria

Platinum mines proposed for the outskirts of Pretoria


Pretoria could see platinum mines on the outskirts of Doornpoort, about 10km north of the city.

However, some city residents and other affected parties are not in favour of the project.


The area where the platinum mine is proposed.
 
The Department of Mineral Resources has awarded a five-year prospecting right on a 2 779.64ha piece of land just north of the N4 to Gemsbok Platinum (Pty) Ltd, a subsidiary of JSE-listed Sable Platinum (Pty) Ltd.

Umhlanga land sale to 'accelerate pace of property development in Durban'

Umhlanga land sale to 'accelerate pace of property development in Durban'


In an unprecedented move, JSE-listed sugar and property giant Tongaat Hulett is to put a 42hectare section of prime land in its booming uMhlanga Ridgeside precinct up for sale in a single transaction early next year.

An aerial view of the R12-billion Ridgeside precinct being developed by Tongaat Hulett in uMhlanga.


The company said that the uMhlanga Ridge node had attracted more than R50 billion in investment since the start of land conversion from sugar cane to property development 17 years ago.

At present 164 000m2, with an investment value of more than R3.6bn, was under construction.

Building confidence remains static

Building confidence remains static


Confidence in the building industry remained at its highest level since 2008 in the fourth quarter with no change from the previous quarter.

The First National Bank (FNB)/Bureau for Economic Research (BER) building confidence index released yesterday revealed that confidence in the industry remained at 48 points on a 100-point scale in the fourth quarter after rising by 7 points in the third quarter.

04 December 2013

'Expect more building failures as South Africans flout regulations'

'Expect more building failures as South Africans flout regulations'
A leading building inspector has warned that fatal building failures in South Africa like the collapse of a new Tongaat shopping mall will proliferate due to a lack of adequate policing of building standards and of building materials.
John Graham, CEO of property inspection company HouseCheck says the Tongaat building collapse was likely caused by a combination of ineptitude including:

03 December 2013

Clifton plot on the market for R70m :

Clifton plot on the market for R70m :


A tract of land of around 2 500m2 is for sale in Clifton, priced at R70 million (R28 000/m2), including VAT.

A view of the site (outlined with a dotted line).


Land is at an absolute premium in the suburb, says Seeff's luxury market specialist, Lance Cohen.

'There is almost no land available in Clifton, Bantry Bay, Fresnaye and Camps Bay - and, certainly nothing of this size or location in Clifton,' he says.

'Banks should give better mortgage deals to long-standing clients'

'Banks should give better mortgage deals to long-standing clients'


Loyal clients should be rewarded with better mortgage deals and interest rates says Bill Rawson of the Rawson Property Group.

Tongaat Mall order 'a day late'

Tongaat Mall order 'a day late'


Controversial Durban businessman, Jay Singh, said he received a High Court order to stop work on the Tongaat Mall the day after its collapse.

Jay Singh in his Phoenix Industrial Park office, knee-deep in plans for the Tongaat Mall.


He also denied in an interview that the eThekwini Metro had sent him letters to halt construction. eThekwini officials had said they wrote to him four months before the cave-in, which killed two and injured many more.

29 November 2013

Media out to destroy R2.1bn property group, says chairman - Moneyweb

The chairman of Nova Property Group, Connie Myburgh says it appears to him that certain sections of the press are doing their best to make things difficult for the group and its directors. Myburgh was speaking at the group’s annual general meeting, held in Pretoria on Tuesday.

The Nova Property Group is the owner of most of the properties that were promoted to investors by failed property syndicator Sharemax. It has property assets worth R2.1bn. Nova acquired these properties as part of a scheme of arrangement that was sanctioned by the High Court on January 20, 2012.

Myburgh took particular aim at Moneyweb and this journalist who attended the AGM by means of a proxy. He said it is this journalist’s intention to hurt the Nova Group. “We know precisely who Mr Cobbett is working with,” said Myburgh. “The people that are trying very hard, like they did in 2010, to hurt the investors, the group and the company.” Despite this alleged attack on Nova, Moneyweb can confirm that to date no action has been taken against it or this journalist for any publication relating to Sharemax or Nova, either with the press ombudsman or through the courts. However complaints have been laid with the press ombudsman against articles published in Business Report.


All resolutions passed.

A curious feature of the Nova AGM was that minority shareholders were not asked to vote on the tabled ordinary and special resolutions. Myburgh said he held proxies for the required majority of shareholders. These shareholders had voted in favour of all resolutions and they were thus adopted at the meeting.

Once the meeting was opened for questions, a shareholder, Willie van Rooyen, asked Myburgh to explain who had voting rights at the meeting. Myburgh replied that this information was contained in circulars that were distributed to investors prior to the scheme of arrangement being adopted. However, he said he did not wish to discuss the matter further, because of this journalist’s presence at the meeting.


Group performing well

Myburgh said that the group performed very well in the past year in spite of constant attacks from certain groups and sections of the press. The group recorded a R150m after-tax profit, driven in large part by a R207m upward adjustment to the fair value of properties.


The unfinished Villa Mall
 Update on Zambezi and The Villa The Zambezi Mall, which previously struggled to attract tenants, has been converted into a Chinese shopping mall. In a recent communication, Nova said that there is no other China mall retail concept in Pretoria and this will differentiate the mall from conventional shopping centres. The mall’s name has been changed to the Tshwane China Shopping Mall.

Villa Mall

For the large, unfinished Villa shopping centre, Myburgh told the meeting that the Nova management is busy talking to a few big groups and potential investors with the aim of completing the project. “If you understand the numbers, it is not difficult to make The Villa a big success,” said Myburgh. However, the group has a problem in that it is involved in a legal dispute with The Villa’s developer, Capicol, over ownership.


How to sell shares.

One investor asked how shareholders might sell their shares. Myburgh replied that the group would not facilitate a market for shares itself. However, he said there are financial advisers are investigating the possibility of a market.

28 November 2013

Building council to probe Singh family building projects

Building council to probe Singh family building projects

The National Home Builders Registration Council has launched an investigation into allegations of shoddy workmanship by companies owned by Jay Singh's family.

The council said that an independent team of qualified professionals had been sent to investigate all housing projects by Woodglaze Trading and Gralio Precast, which were both owned by Singh's ex-wife, Shireen Annamalay.

27 November 2013

Tongaat mall developer linked to failed Durban Point project

Tongaat mall developer linked to failed Durban Point project


Tongaat mall developer Jay Singh has now emerged as a major player in the failed Dolphin Whispers development at Durban's Point.


The Dolphin Whispers building at Durban's Point waterfront.

Details from a forensic investigation showed that R10 million was the usual limit for approval of loans of this type, but the board of the Ithala Development Finance Corporation signed a cheque for R83m for Dolphin Whispers.

Durban bids to have Tongaat mall demolished

Durban bids to have Tongaat mall demolished


The eThekwini Municipality is going after Rectangle Property Investments, the company developing the Tongaat mall which collapsed, killing two, last week, and intends bringing court action to have the property demolished.

The city also wants to bring an application to have the company held in contempt of court.

If the company is found guilty of contempt of court, Durban businessman Jay Singh's son, Ravi Jagadasan, as the sole member of the company, could be jailed.

The municipality's mayoral spokesman, Sthembiso Mshengu, said yesterday that the city was considering the demolition application but was waiting for an engineer's report on the stability of the building.

Property owners, courts take on illegal building

Property owners, courts take on illegal building


Property owners, tired of waiting for council officials to act against illegal developments, are increasingly turning to the courts, seeking high court orders to stop town planning and building infringements.

And judges - alarmed at what appears to an increase in defiance of the law in these matters - are taking a more robust approach.

In one matter in the Durban High Court on Friday, regarding the alleged illegal use of a residential property as a restaurant, acting Judge Peter Rowan suggested that the interim interdict, stopping trade, be strengthened to include that all signs advertising the business be removed immediately.

22 November 2013

Commercial property owners to tackle municipal rates

I found this article to be fascinating, not because there is anything earth shatteringly new that is revealed but because it coincides with a dinner I attended last night with the President of SAPOA (Mr. Estienne de Klerk, who is quoted extensively in the article) and the Mayor of the City of Joburg.

It was an awesome SAPOA event and included many prominent people from the property industry and several top City of Joburg officials, including the Municipal Manager and a number of MMC's.

Mayor Parks Tau spoke very eloquently and his vision for the future of the city was extremely impressive.  The Mayor mentioned that progress toward a future vision should not be undertaken at the expense of glossing over current issues.

There are obviously dire backlogs in the planning department and the billing system (including Clearance Certificates) is an ongoing problem.  These issues were not specifically discussed at the function BUT there does seem to be a new spirit of co-operation between the City of Joburg and SAPOA.  Hopefully this "friendship" between SAPOA and the City (remember that not so long ago the two were fighting an Appeal in Bloemfontein) will yield better results for all.

Gareth Shepperson

Commercial property owners to tackle municipal rates


Commercial property owners are poised to challenge the major urban municipalities over the high increases in municipal rates, which they believe are unsustainable.

Comments sought on Centurion lake property proposals

Comments sought on Centurion lake property proposals



Tshwane residents are being given a chance to comment on the proposed multibillion-rand development on the site of the troubled Centurion Lake.

The development would be known as Symbio-City, with the tallest building in Africa, once it sees the light, subject to successful completion of land alienation and zoning processes.


Project leader Roger Warren told the Pretoria News that plans for the development were with the municipality and, to his knowledge, public participation and zoning processes had started. The land is owned by the Tshwane Metropolitan Municipality.

21 November 2013

Abandoned millionaires row property a 'problem building'

Abandoned millionaires row property a 'problem building'

Cape Town city officials yesterday inspected a Clifton bungalow belonging to the son of the Equatorial Guinea president, bought for over R23 million nine years ago, and said they would be taking legal steps against the absent owner.


The abandoned Clifton bungalow, bought for R23.5 million nine years ago.


The bungalow, with sprawling views over Fourth Beach, was bought by Teodoro Nguema Obiang Mangue in 2004, for R23.5m.

19 November 2013

Growthpoint becomes SAs biggest office property owner

Growthpoint becomes SAs biggest office property owner


Growthpoint has acquired the entire property portfolio and management business of the Tiber Group for R6.6 billion in the listed property fund's single largest transaction.


The Towers in Sandton are part of the property portfolio being aquired by Growthpoint.

It will make Growthpoint the biggest office property owner in South Africa with a portfolio of 1.5 million square metres of office space valued at about R25bn.

Estate Agency Affairs Board queries 'search invalidity'

Estate Agency Affairs Board queries 'search invalidity'

The Estate Agency Affairs Board (EAAB) is pleading with the Constitutional Court to suspend the declaration of invalidity of the law governing its work as this would render searches dating as far back as 1997 unlawful.

The board is supported in its bid by Finance Minister Pravin Gordhan and Trade and Industry Minister Rob Davies, to whom the EAAB reports.

In June, the Western Cape High Court found that even though the EAAB had evidence that Auction Alliance had breached the Estate Agency Affairs and Financial Intelligence Centre Acts, both laws were unconstitutional and invalid because they violate the right to privacy by permitting targeted searches without a warrant.

Property developers to probe delays in Western Cape

Property developers to probe delays in Western Cape


Concerned about slow development processes in the Western Cape, the South African Property Owners Association (Sapoa) has commissioned a study into the value of the private property sector in the province, and the economic costs of inefficient property development processes.

Development economists UrbanEcon are assessing the size and scope of the private commercial and industrial property sector and - more importantly - laying bare the risks associated with the property development process.

Preliminary numbers in the draft report, titled The Role and Impact of the Commercial Property Sector - Western Cape Province, show the private property sector contributes significantly to the Western Cape economy. It contributes 9 percent, or R23 billion, in construction and property management activities.

15 November 2013

Rode's Report shows property price slowdown

Rode's Report shows property price slowdown


After starting this year off with a bang, the annual growth in nominal house prices has tapered off in recent months, according to the latest Rode's Report on the property market.

But Rode & Associates chief executive Erwin Rode said the cooling in house price growth should not come as a surprise given that key drivers of house prices were showing no vigour.

Rode said the official unemployment rate rose to 26 percent in the second quarter, while growth in the disposable income of households fell to 7 percent whereas a year earlier disposable incomes were growing at an unsustainable rate of almost 13 percent.

14 November 2013

Tshwane council bills go online

Tshwane council bills go online

Property owners in Pretoria are now able to view, download and make payments for all municipal accounts electronically from anywhere using their computers and cellphones.

Yesterday, the city launched the eTshwane service, a free online system that provides a full history of accounts and allows users to interact with the municipality - from lodging complains, to queries and compliments. The system allows real-time updates on payments.

Property owners to have their say on Centurion Lake

Property owners to have their say on Centurion Lake


Residents of Tshwane may have a say on the latest attempt to rehabilitate Centurion Lake which has fallen from grace in recent years.


A formerly popular attraction that used to draw hundreds of people to the area every day, the lake is now a dirty, stinking mess, which has seen businesses there losing clients.

Now the Tshwane Municipality has initiated a public participation process.

European Investment Bank supports local low-income housing

European Investment Bank supports local low-income housing

The European Investment Bank (EIB), Europe's long-term lending institution, has agreed to provide a further 250 million Euro (R2 billion) for investment in affordable and social housing in South Africa.

The new programme will be managed in South Africa by four local partners - two public development finance institutions and two commercial banks - which have already identified development projects that would deliver about 23 800 new housing units.

The first of the four loan agreements was signed in Joburg recently by Pim van Ballekom, European Investment Bank vice- president responsible for sub- Saharan Africa and South Africa, and representatives of Nedbank.

11 November 2013

SHEPPERSON ATTORNEYS - IN THE PRESS

Since my last post with the same title, some new Articles by and about Shepperson Attorneys have appeared in the press.

Please see the latest issue of the Property Review Magazine.

Pages 20 - 21

The magazine contains a nice feature on me and, more particularly, in my capacity as a National Councillor of SAPOA.

The latest issue of Asset Magazine contains an Article that I really enjoyed writing because it is more lighhearted than previous hard fact based articles that Shepperson Attorneys has published in earlier editions of Asset Magazine.


Please see my Article on Pages 68 to 70.

Gareth Shepperson
Shepperson Attorneys
Corporate, Commercial and Property Law

08 November 2013

GARETH'S LITTLE RANT: Log a Call ... the Death of Service


The ubiquitous Call Centre is proving to be the bain of my existence.

Whilst I realise that with the advent of major international corporations, it is no longer possible to have a manager sitting somewhere dealing with queries.  It is simply not possible to deal with thousand of queries from all over the country (or the world).

However, whoever invented the current model of the operation of Call Centres deserves to be Hung, Drawn and Quartered as in the days of old.

The phrases "Log a Call" and "Let me give you a reference number" should be banned from the English language upon punishment of death (or at the very least having your tongue cut off).  Similar phrases like "We are experiencing high call volumes" and "Your call is important to us" should be worth at least 20 lashes.

Let me give a recent example:

07 November 2013

Chinese to build 'New York of Africa' in Gauteng

My personal favourite piece of property news in a while.

Some may see it as a threat to local Developers but I am of the opinion that investments such as this have far more potential benefits to SA Property Players than potential threats.


Investment has a knock-on effect and the more foreign direct invest (FDI) that South Africa can secure, the better our economic growth, the more employment as a result of growth, the more disposable income for every individual/corporate ... and therefore the more that such individuals/companies can spend on PROPERTY.

Am I being overly simplistic?  Why not comment?

A recent economic impact study by the Bureau of Economic Research at Stellenbosch University indicated that the implementation of Modderfontein’s previously approved spatial development framework will cost about R77bn.

According to the study, there is capacity to create 22 000 jobs, 65% being semi-skilled and unskilled. It estimates that while R1bn will be generated in local government rates and taxes, direct and indirect benefits for the national economy could be R14bn.


(Plus the pictures are quite cool.)

Gareth Shepperson



Chinese to build 'New York of Africa' in Gauteng

Explosives and chemicals firm AECI had given preference to Chinese land developers in the sale of a 1 600 hectare site as they could buy a larger portion of its Modderfontein property with more than R1 billion up front, chief financial officer Mark Kathan said yesterday.

Kathan said that local buyers 'never made firm offers' and only expressed interest to buy small pieces of the 1 600ha of undeveloped land which is managed by AECI's Heartland subsidiary.

Hong Kong Stock Exchangelisted Shanghai Zendai Property will develop the mixed-use site over a period of 10 years and has expressed an interest in collaborating with local developers on projects.

Shanghai Zendai planned to transform the Modderfontein property, in eastern Johannesburg, into a 'New York of Africa' with investments of R80bn over the next 15 years, chairman Dai Zhikang said.

The company will build a financial hub, 35 000 houses, an educational centre and a sport stadium. The site was home to an explosives factory that opened in 1896 to support the gold mining industry. It included a wetlands area that would be protected, and could be the equivalent of Central Park in New York, Dai said.

The AECI site.


'It will become the future capital of the whole of Africa,' Dai said. 'This will be on par with cities like New York in America or Hong Kong in the Far East.'
According to the company's local legal adviser, Edward Nathan Sonnebergs (ENS), the development will include an African heritage theme park and a convention centre.

However, ENS Africa said: 'No plans have been approved yet as the deal was conditional on contractual undertakings in the following months on behalf of both the buyer and the seller.'


The development, which is yet to be named, would become a hub for Chinese firms investing in sub-Saharan Africa, Dai said. The deal is set to create nearly 22 000 jobs over the next 10 years, 65 percent of which will be semi-skilled and unskilled. The firm estimates direct and indirect benefits for the economy will total R14bn over the same period.

AECI chief executive Mark Dytor said: 'The problem is in the South African economy, there are not many guys that can come with that much money up front, knowing it would take such a long time to develop and to get the returns - so this was ideal for us.'

He said the sale of this large tract of land would help AECI focus on its core strategy, which was mainly specialty chemicals and explosives. 'The land business has never been a competence of ours because what we really do is open up the land but we never build top structures on the land.'

Kathan said that the company was looking for a way to exit the property in a clear way and this deal would enable such a move.

As the property is largely undeveloped, Shanghai Zendai will still need to add roads, electricity and other infrastructure. AECI will give the Chinese company a 15 percent discount for providing cash upfront.

Dytor said the company had about four years to transfer the land to the developers and would receive the whole amount around July 2014 subject to AECI delivering the first tranche of land.

Other conditions precedent to the land deal are the approval from Shanghai Zendai's headquarters and the Competition Commission.



The land that will be transferred to Shanghai Zendai includes Longlake, Westlake and a 'farm portion', the largest of which is Modderfontein North. The mixed-use site includes portions that are zoned commercial, residential and retail.

The other portions of the Modderfontein development include the existing Greenstone shopping centre and some commercial, recreational and residential features.

About 1 200ha of the Modderfontein property is still available for sale or to extend AECI's footprint.

Shanghai Zendai has developed as many as 12 properties in China and most recently in New Zealand. Dai said Modderfontein was identified due to its size and strategic locality in the development corridor between OR Tambo International Airport and the Sandton central business district. He said it was a stepping stone for the company should it choose to grow its footprint in South Africa and the rest of Africa.

The sale of Modderfontein is AECI's largest single land deal .

Kathan added that the sale of some of the company's Milnerton property in Cape Town in 2006 was another significant transaction totalling R260 million, but 'it certainly was not of this magnitude'.


AECI management had not yet decided how to spend the cash from the deal, but said acquisitions and expansions could be on the cards.

Dytor said the explosives business would be pushed into international markets, with a particular focus on Africa.

AECI's interim results to June showed a 13 percent rise in revenue to R7.2bn after a good performance from its explosives unit. It rose 2.07 percent to R123.50 on the JSE yesterday.

Business Report

Electricity, rates and taxes remain top property costs

Electricity, rates and taxes remain top property costs

Electricity, rates and taxes remained the biggest contributors to operating costs of property owners in the first half of this year, according to a report from the SA Property Owners Association (Sapoa).

Electricity remained the largest cost as a proportion of total operating costs at 32 percent, despite falling by 2 percent in the first half of the year from a year earlier, followed by rates and taxes, which represented 21 percent of total costs and grew by 2.3 percent year on year.

The third highest operating cost contributor was management costs at 8 percent, despite contracting by 5.9 percent over the period, according to the report compiled by International Property Databank for Sapoa.

Fran├žois Viruly, a property economist and professor at UCT's School of Construction Economics and Management, said this week that operating costs had in the past few years increasingly become an issue in the property sector because they had risen at a significantly higher rate than the inflation rate, resulting in the industry looking carefully at green buildings and cost efficiency.

'Consumers still hungry for homes and loans'

'Consumers still hungry for homes and loans'

According to the latest statistics released by BetterBond Home Loans the number of home loan applications received by the group increased by 5,06% in the 12 months to end-October, compared with the previous 12 months, while the total value of those applications showed a 12,26% y/y increase.

In addition, says BetterBond CEO Shaun Rademeyer, the total value of home loans formally granted through the originator showed a huge year-on-year increase of 23,85% at end-October - by contrast with the 2,7% y/y growth in overall household mortgage balances reported by the Reserve Bank at the end of the third quarter.

End in sight for nightmare on Pretoria roads

My very own personal pet hate!

I have blogged on a couple of occasions bemoaning the fact that I have to endure the absolute chaos that has been created in the City center by the construction of the bus routes.  As part of my duties, I go to the Deeds Office several times a week and suffer the extreme frustration of the roads having been narrowed to a lane or two and all the delivery vehicles simply stopping in one of these remaining lanes to do their deliveries.

When you eventually reach your destination, you find that they have taken away all the metered parking.  Crazy!

Anyway, at least they will rapidly finish the project ... NOT! (Completion date is 2016 - and we know how good the public service is at meeting deadlines - think Madupi.)

Gareth

End in sight for nightmare on Pretoria roads

Come April, the traffic nightmare along Nana Sita and Paul Kruger streets could be over as the R3.5 billion Tshwane Rapid Transit system takes to the road.

An artist's impression of the Tshwane Rapid Transit station in Lynnwood Road next to Loftus Versfeld.

'Many loopholes can be found in Agreements of Sale'

'Many loopholes can be found in Agreements of Sale'

Any experienced property professional can help a seller or buyer get out of 80% of Agreements of Sale says Wayne Albutt, Regional Sales Manager for the Rawson Property Group in the Western Cape.

'Most traditional Agreements of Sale will have had sections added to them or deleted from them so as to fully cover the agreement and in most cases it is these additional clauses that can be exploited and give rise to problems, making the Agreement of Sale unenforceable in terms of the Alienation of Land Act. Should one of the parties want to get out of the agreement after signing, an astute lawyer or estate agent can often find reasons for making the Agreement of Sale voidable.'

05 November 2013

No answer on Tshwane's gated communities

No answer on Tshwane's gated communities


Gated communities need to move away from only worrying about crime in their neighbourhoods, but look at broader issues that affect the city.

Speaking at the annual meeting of Lynnwood Glen Estate at the weekend, Tshwane mayor Kgosientso Ramokgopa said the city supported gated communities but cautioned against them only concentrating on crime.

Ramokgopa said it was up to the council to decide whether to lift the city's moratorium on granting permission for communities to erect gates for access control.

'Right now, your biggest concern is crime. We hope that in future there will be other issues that you as a community can be interested in,' he said.

Durban's secret glass dome unveiled

Durban's secret glass dome unveiled


For anyone born before the 1980s, John Orr's was synonymous with shopping for the whole family, and a visit to the Dr Pixley kaSeme (West) Street department store was an outing to be savoured.


The newly restored glass dome at the Jetmart store.

It sold everything, including the proverbial kitchen sink, and was a one-stop destination for families.

Finally, however, it could not compete with the new breed of chain store and the Durban store and its counterparts elsewhere in the country were sold about 30 years ago.

It was the end of an illustrious chapter in the history of Durban commerce. Today only the shells of the handsome original buildings remain.

But an exciting discovery three years ago led to renewed interest in the building from architects and historians.

04 November 2013

Rise in bank's house price index slows to 6.9%

Rise in bank's house price index slows to 6.9% :

The rise in the Standard Bank house price index softened to 6.9 percent year-on-year in September from a revised 7.6 percent year-on-year figure the month before.

In September, the nominal (not adjusted for inflation) index monitoring sectional title units matched the August improvement of 4.2 percent year-on-year.

Momentum in the nominal index monitoring freehold properties eased to 8.7 percent year on year in September from 9.5 percent year on year in August. In spite of the softness in September, the index remains range bound between 7 percent and 8 percent.

Although also range-bound between 2 percent and 3 percent, household credit growth continues to show signs of life.

FSB weighs in on controversial Sharemax opinion

Responds to Sharemax director’s comments on Fais Ombud complaints.

JOHANNESBURG – The Financial Services Board (FSB) has found it necessary to comment on a circular issued by Sharemax director Dominique Haese. The circular, dated August 6, 2013, suggests to investors that if they pursue complaints against their financial advisers with the Fais Ombud, they may forfeit rights to investment returns or repayments from the Nova Group.

The Nova Group has approximately 33 000 investors who acquired shares or debentures as a result of the restructure of property syndications promoted by Sharemax Investments. The restructure resulted out of a scheme of arrangement which was sanctioned by the High Court on January 20, 2012.

The Nova Group is controlled by four directors, two of whom, Dominique Haese and Dirk Koekemoer, played important roles in the promotion of Sharemax investment products.

On October 25 the FSB issued a media release in response to Haese’s circular. Says the FSB: “The circular may be read as suggesting that the Fais Ombud no longer has jurisdiction to deal with complaints of former Sharemax investors, not only against the Sharemax companies themselves, but also against their directors or functionaries.”

Tolls 'to cause mass tenant migration' :

Tolls 'to cause mass tenant migration'


The introduction of e-tolling is set to cause a major upheaval in the Gauteng property market, and especially in the rental sector.

'The toll fees are going to place an additional strain on household budgets and many people who currently use the freeways to commute long distances to work will want to relocate to avoid them,' says Jan Dave of the RealNet estate agency group.

'This is obviously going to be easier for tenants than homeowners, and the immediate result is likely to be a spike in demand for flats and other rental properties close to the decentralised office and industrial nodes, and in the CBDs of Johannesburg, Pretoria and other large centres in Gauteng.'

Rental demand is also likely to strengthen, he says, in the increasingly popular areas close to public transport access points like Rea Vaya, Gautrain or Metro stations, as more people try to avoid commuting by car.

Property development slated for Pretoria's Loftus Versfeld stadium

Property development slated for Pretoria's Loftus Versfeld stadium

Pretoria's Loftus Versfeld and its surroundings are set to get a massive economic and aesthetic upgrade with the construction of a R1.2 billion shopping and office precinct which is expected to be operational by the beginning of 2016.


An aerial view of the site plan and road networks.

The project, which will consist of shops, restaurants, an office park, a hotel, a gym and a sports museum, is expected to break ground in the middle of next year, with the construction of the entire development set to last 18 months.

This futuristic and environmentally friendly project will be positioned at the corner of Park and Kirkness streets and will be bordered by Pretoria High School for Girls and Loftus Versfeld Stadium. The development which will occupy the entire tennis court and the open field parking on the north side of the stadium was presented by Abland (Pty) Ltd yesterday. Abland is a property development company with a significant presence in the city through developments such as the Centurion Lifestyle Centre, Wonderboom Junction Retail Centre, Hazeldean (Pretoria east), Riverside in Centurion and, in Joburg, Alice Lane in Sandton and The Pivot at Montecasino.



An artist's impression of the proposed development.

Abland director Thinus Delport yesterday confirmed that the project planning was at an advanced stage and that upon completion, Loftus Park would be the first green star precinct in the country. 'It is in excess of R1 billion and we estimate that the value will be between R1bn and R1.2bn on completion.

23 October 2013

Housing tribunals 'function unlawfully'

Housing tribunals 'function unlawfully'

Court rules regulate the conduct of the proceedings of the courts, as for example, in the case of a tenant or landlord seeking to take a ruling or judgment on appeal.

Where a party intends to appeal against the judgment of a court or to take on review an alleged irregularity, the party is entitled to a copy of the transcript, upon payment of the prescribed fees.

This is usually paid to an outsourced commercial company, such as Sneller Recordings. The transcript of the mechanical or digital recording of the proceedings must be certified as correct.

Rental Housing Tribunals do not have regulations as required by the Rental Housing Act 50 of 1999 as amended.

Joburg council says no to Gupta rezoning plan

Joburg council says no to Gupta rezoning plan

A request by the Gupta family for their property in Saxonwold, Joburg, to be rezoned has been declined, a councillor said yesterday.

Ward 117 councillor Tim Truluck said he received written notification yesterday that the city's town planning tribunal had declined the request. No reason was given.

Gupta family spokesman Gary Naidoo said he would respond to questions by e-mail.

Truluck said that if the Guptas wanted to reapply for rezoning, they could do so at a provincial level, or submit a new application to the City of Joburg that was more in line with municipal requirements. Residents could also look at the application.

City spokesman Gabu Tugwana said: 'We believe the Guptas have knowledge of why the rezoning was declined. Rather (than us), the family are at liberty to explain the reasons why.'

22 October 2013

Tshwane transformation to spare jacaranda trees

Tshwane transformation to spare jacaranda trees

Tshwane's central business district and transport system are undergoing major changes to transform the city into a modern capital, one that will also maintain its heritage like its famed jacaranda trees.


Jacaranda trees are in full bloom, lining many of the streets of Pretoria, and the beautiful purple blossoms are a huge tourist attraction.

Come October and the city's jacaranda trees are in full bloom, their blossoms forming a purple carpet on pavements and lawns.

Streets in the CBD like Minnaar and Johannes Ramokhoase are lined with jacaranda trees planted more than a century ago.

R800bn needed to clear housing backlog

R800bn needed to clear housing backlog

South Africa needs at least R800 billion - and a 'miracle' - to clear its current housing backlog of 2.1 million houses within the next seven years.

This is according to the Finance and Fiscal Commission (FFC), which released its report on 'alternative finance and policy options for effective and sustainable delivery of housing in South Africa' yesterday.

It also believes the current approach to housing delivery won't be sustainable.

The FFC's main responsibility is to make recommendations on the equitable division of revenue between the three spheres of government and provide advice to organs of state on financial matters.

The commission's head, Bongani Khumalo, said the housing sector faced many challenges.

They included the ever-increasing housing backlog and a decreasing number of low-cost houses being delivered by the government.

18 October 2013

Affordable housing is the place to be.

Arrowhead snaffles an opportunity in residential rentals.

Massive demand for quality rentals at affordable levels has motivated Arrowhead Properties (JSE:AWB) to step into the fray of residential property.


The listed property company may have only published a maiden annual report but its management team comprises property experts of long standing within the industry.  They have a reputation for diversification and high yields, while aiming to provide shareholders with sustainable revenue sources to support above average quarterly distributions.

Thus the acquisition of a residential property portfolio worth R406m earlier this week came as no surprise and follows Arrowhead’s JSE conversion to Real Investment Trust (REITS) in July. This also coincided with its cautionary announcement to shareholders of the acquisition, originally intended at R500m.

The pros and cons of a fixed bond rate

The pros and cons of a fixed bond rate

With the prime interest rate at a low that was last seen in the market over 30 years ago, many homeowners may be contemplating fixing the rate on their bond.

This is particularly appealing to homeowners who are risk averse and want a fixed amount that they can budget for each month, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

'Where a homeowner stands financially, along with their appetite for risk, will be the determining factors as to whether a homeowner chooses to fix their rate or opt for a variable or flexi rate. Homeowners who are at their budget's limit and cannot take the risk of an interest rate increase are probably more likely to opt for a fixed rate than those who have some breathing room in their budget.

The security of a fixed rate ensures that the homeowner will not have to deal with any unexpected changes and additions to their monthly expenses for a fixed period of time. However, that said, there are a few elements that a homeowner should think about before they decide to fix their rate,' says Goslett.

Gautrain plans many more routes

Gautrain plans many more routes

Seven new Gautrain routes are set to be built over the next 25 years, and they will stretch from Soweto to Tshwane East.



In other changes, Gautrain buses will be phased out, and more use made of branded taxis that will transport commuters to and from the new stations.

Gautrain Management Agency chief executive Jack van der Merwe said yesterday the first new route was planned from the Sandton station to Randburg, and would run mainly underground.

Construction is expected to start in the next four to five years.

Banks increasingly wary of property fraud

With regard to the first scam in the article, if you pay the deposit to a reputable Conveyancer (or a reputable Estate Agent), then the so-called "seller" will not have access to the funds until transfer in the Deeds Office, by which time the fraud should have been discovered.  The funds will also be insured.  Obviously, the more sophisticated scamster can use false ID's and other documents but the "seller" can't just take the money and run before some level of due diligence is completed.

My advice is that by retaining the services of REPUTABLE Estate Agents and Conveyancers, the risk is reduced to virtually zero.

Gareth Shepperson
Reputable Conveyancer


Banks increasingly wary of property fraud

'Banks need to perform more rigorous checks because various types of fraud have now become increasingly common in property sales,' says Bill Rawson of the Rawson Property Group.

'There have been cases where the seller in fact did not own the home and the true owner did not even know that his house was being sold by the trickster.'

In these situations, says Rawson, the crook, posing as the owner, ensures that the initial confirmatory deposit is paid into his pocket - and then disappears. In some cases far bigger sums - 50% or even 100% of the sales price - have been paid out and are completely lost to such unidentifiable fraudsters.

The bank, for their part acting in good faith, may well pay out the full sum to the so-called seller, only to find that they are left with a home that has to be repossessed and, if sold, is likely to fetch well below the market value - while the true owner is left with a huge legal complication.

In other cases, says Rawson, the true owner and buyer come to an agreement to raise the price of the house above its actual market value, thereby enabling the buyer to get a bigger bond. This, he says, has been especially prevalent when the buyer has wanted a 100% bond which the bank is not prepared to give him. Surprisingly, although the bank will usually send its own valuer to inspect the property, these people can on occasions be persuaded that the higher price is valid.

This becomes possible, says Rawson, because bank valuers often have to assess properties in a wide variety of areas and cannot be expected to be completely up-to-date with values in all of them.

Similar scams, says Rawson, take place every year in the rental market. A home - often a holiday home - will be advertised (perhaps in terminology too vague to pinpoint its exact whereabouts) and then the bogus agent or landlord will pocket the deposit or even the full rental when it is paid in advance of occupation.

'In order to make sure that you are never deceived when purchasing or renting a property,' said Rawson, 'always make sure that you use an agent from a well reputed agency that can be held accountable for their actions and who will make sure the seller is who they say they are.'

Rawson Press Release

Credit data amnesty 'will increase cost for borrowers'

Credit data amnesty 'will increase cost for borrowers'


Moody's Investors Service warns that the removal of adverse credit information from public records will have a negative impact on the rating of South African residential mortgage-backed securitisation and asset-backed securitisation transactions.

In a report released today, it advises that the removal 'will reduce the amount of information available to originators to assess the creditworthiness of new borrowers, and may impede responsible lending and borrowing practices, which will increase credit risk'.

The report was released in response to a cabinet statement issued last month, which said the cabinet 'approved the recommendations of the select committee on trade and international relations'. The committee's guidelines sought 'to address the issue of access to credit to those South Africans that can afford credit. These are consumers who may have paid their debts in full and are in a position to afford credit but whose access is currently impeded by negative credit information on their record.'

The government has not yet confirmed which of three options presented by the select committee will be implemented. The three options have been described as least risk, medium risk and high risk. The government has given the public until the end of this month to submit comments on the committee's proposal.

The Moody's report echoes warnings from banks, which have said that the absence of credit-related information would heighten the risk faced by lenders and would result in an increased cost to borrowers because of the increased risk.

Although the government's proposal is thought to be aimed at providing relief for the many consumers who have accessed 'unsecured lending facilities', Moody's highlights the fact that the proposed credit information amnesty will affect secured as well as unsecured lending activity.

It states that the ongoing removal of negative credit information from public records will reduce the incentive for existing borrowers to make good on their obligations.

According to the credit rating agency, borrowers' willingness to pay their obligations decreases when they expect that payment defaults will be removed from the credit bureau data that other financial institutions may access.

The rating agency says the new measure will add to previous limitations on information available to credit bureaus in South Africa and contrasts with improvements in the credit information being made available in other countries.

Andre du Plessis, the chief financial officer at Capitec Bank, which is a major player in the unsecured lending market, told Business Report yesterday that when the proposed information amnesty was implemented Capitec would still have access to sufficient information to be able to ensure continued prudent lending.

'Even if the amnesty is implemented there is still sufficient other information available from the credit bureaus to be able to predict the repayment behaviour of potential borrowers.'

Business Report

17 October 2013

'Overpricing still holding back sales'

'Overpricing still holding back sales'

Higher priced properties are still taking longer to sell - and showing bigger differentials between asking and selling prices.

Denis Quayle, owner of the four Harcourts Maynard Burgoyne real estate offices in Cape Town, says many sellers at the upper end of the property market are still clinging to price expectations that are out of step with market realities.

'Consumers are hard-pressed from all sides due to rising living costs - and even the higher income groups are very value conscious at the moment. On the other hand, some sellers have a skewed idea of what their properties are worth in the current market and are slow to take advice from experienced estate agents on market-related asking prices,' he says.

'Unfortunately, their determination to achieve certain asking prices often comes at a high cost, in terms of the length of time it takes to sell a property and the holding costs that sellers have to carry during this period.'

For example, the Institute of Estate Agents property statistics for the year to end- August show that properties in the Cape Town suburbs of Bergvliet, Constantia, Diep River, Kirstenhof, Meadowridge, Plumstead and Tokai took an average of 92 days to sell, and that on average, selling prices were 12% lower than the original asking prices.

'However, the stats also show that upmarket Constantia recorded the biggest average difference between asking prices and selling prices (14,49%) and that homes here too almost double the average time to sell (166 days),' Quayle notes.

'And further analysis shows that Constantia properties listed at prices below R3m stayed on the market for an average of 126 days and sold for an average of 10,23% less than asking price. Those listed at between R3m and R5m took an average of 127 days to sell - for 13,14% less, on average, than the asking price.'

In the R5m to R10m bracket, the average number of days on market increased to 214 and sale prices were 11,82% lower, on average, than asking prices. For properties above the R10m mark, however, the average price differential jumped to nearly 20% and the average listing time was 276 days.

However, Quayle adds, of the seven suburbs analysed, Constantia did show the highest number of sales for the 12-month period at 188 units. 'This would indicate that Constantia remains a highly sought-after suburb, but that buyers are very well versed on market value and are prepared to negotiate hard - or keep looking - in order to pay only what they regard as a fair price. Sellers who want to sell quickly should take note.'

Harcourts Burgoyne Press Release

More commercial property tenants pay rent on time

More commercial property tenants pay rent on time

The percentage of commercial property tenants in good standing has slowly improved since the end of 2010 despite an increasing proportion of tenants failing to pay their rent on time, according to TPN credit bureau.

TPN warned in its latest commercial property rental monitor that there was a worrying trend of tenants migrating from the 'paid on time' category into the 'grace period' and 'paid late' categories, which were at a combined 27 percent in the second quarter.

To put this trend into perspective, TPN said, late-paying tenants in the fourth quarter of 2010 bottomed out at 13 percent and remained in the 19 percent to 22 percent range until increasing to 27 percent in the first and second quarter of this year.

'This will bring increasing cash flow pressure to bear on landlords in meeting monthly operational costs,' Michelle Dickens, TPN's founder and managing director, said.

Tenants in good standing are regarded as those who either pay on time, pay during the grace period or pay late. However, the overall rental payment of commercial tenants nationally shifted only marginally in the second quarter of this year compared with the previous quarter.

Tenants in good standing dropped marginally to 83 percent while those in the 'paid on time' category, 'paid during the grace period' and 'paid late' brackets were all unchanged compared with the previous quarter.

There was a marginal decline in the 'did not pay' category to 6 percent from 7 percent, compared with 16 percent of tenants in the fourth quarter of 2010.

The biannual property indicator released last month by the SA Property Owners Association and Investment Property Databank showed retail vacancies were stable but the office sector continued to register high vacancy levels of 12.6 percent overall.

The compilers of the indicator said recent office development activity was placing pressure on rental levels and lower-grade office space. Inner city offices continued to register low occupancy levels, recording a 22.8 percent vacancy rate for the first half of the year.

Vacancy rates in the industrial sector averaged 2.8 percent for the six-month period, they said.

TPN has categorised commercial tenants across four basic monthly rental payment brackets: tenants whose basic monthly rental is below R10 000; tenants in the R10 000 to R25 000 bracket; the R25 000 to R50 000 bracket; and tenants whose basic monthly rent is greater than R50 000.

TPN said there had been a noteworthy increase in tenants in the lowest-priced category to 35 percent in the second quarter from 29 percent 18 months ago.

Dickens said this indicated a shift of tenants moving out of the two mid-range brackets of R10 000 to R25 000 and R25 000 to R50 000.

'While these mid-size tenants are clearly price sensitive, there appears to be little movement among larger organisations in the R50 000-plus bracket, who make up 22 percent to 23 percent of the commercial market,' she said.

Dickens added that valuable insights could be gained by understanding how payment behaviour changed based on tenants' rental brackets. She said the lower the rent, the more challenging rental collection became.

'Tenants who pay less than R10 000 are three times more likely to default than their R50 000plus counterparts. For instance, the 'did not pay' profile for those in the category below R10 000 a month was 10 percent, whereas tenants in the R50 000-plus category only reflected 3 percent nonpayment,' she said.

Dickens said it was also important to note that commercial tenants were traditionally given greater leeway in partial and non-payment when a landlord or property manager allowed them time to rehabilitate. The cost of this latitude could be seen in the default to rent ratio, which stood at 631 percent or six months rent lost. To put this number into perspective, the corresponding residential property ratio was only two months loss of rent.

Dickens said the commercial rental payment performance looked solid overall, despite a few flags indicating that some commercial tenants were finding trading conditions difficult. 'Obviously this affects monthly rental payments, hence the increasing number of tenants in the smaller space and rental value bracket, as well as the marked payment slowdown in this rental category.'

Business Report