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Showing posts from September, 2011

Where to for the commercial property industry?

Where to for the commercial property industry? ....Asks Rodney Luntz. With the Rand having depreciated, growth in the SA economy predicted to be sharply down and the global economy in turmoil - “Where to now for the commercial property industry?”. From an industrial perspective everyone in the market was clamouring for a weaker rand and given recent circumstances, commercial property experts are now pondering whether this will be the life line for the industrial property market? Although a weaker rand will make South Africa’s manufacturers much more competitive, the truth is that the global crisis has dented demand and no matter how weak the rand is or becomes, if demand is down then the industrial sector as a whole will decline. Until the global economy and our own economy begin to recover, the industrial sector is going to remain depressed. Furthermore according to economists our own growth forecasts have been reduced to 3.2% from 3.7% previously and to 3.6% from 3.9% next yea

Pinnacle Point risks delisting from JSE

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Pinnacle Point risks delisting from JSE Ailing property firm Pinnacle Point Group may be delisted from the Johannesburg Stock Exchange should a final liquidation in November be approved. Already the trading of Pinnacle Point shares, which are 1c apiece, have been suspended on the Johannesburg Stock Exchange (JSE) following a court ruling ordering the company to be put under provisional liquidation. “The requirements make provision that if a company is placed into liquidation the company may be suspended under those circumstances and typically we would. In this particular case the company also requested the JSE to suspend the listing and we obviously acceded to that request,” Andre Visser, the general manager for Issuer Services at the JSE said. Asked what the motivation was for Pinnacle Point to remain listed on the JSE if it had liquidity issues, Visser said: “There is no real motivation at this stage that is why it has been suspended. But what I am saying is we will only co

FNB/BER building index steady

FNB/BER building index steady FNB/BER building index steady Building confidence has remained almost unchanged in the third quarter of 2011, from the preceding quarter, according to First National Bank and the Bureau for Economic Research. The latest FNB/BER building confidence index edged down to 23 points from 24 points in the preceding quarter, it was revealed on Wednesday. The index can vary between zero - indicating an extreme lack of confidence - and 100, indicating extreme confidence. It reveals the percentage of respondents that are satisfied with prevailing business conditions in six sectors, namely architects, quantity surveyors, building contractors, building sub-contractors, manufacturers of building materials and retailers of building materials and hardware. The survey showed that the composite building confidence index remained steady during the quarter under review, as changes in the constituent parts cancelled each other out. The confidence of quantity surveyors,

Self-employed still struggle to obtain bank home loans

Self-employed still struggle to obtain bank home loans In spite of interest rates being at a 33-year low, banks remain very cautious in granting home loans, with all information submitted to them being thoroughly analysed to ensure applicants can afford to buy, says Kim Pistor, legal adviser and conveyancing manager for Rabie Property Group. Pistor says although it is relatively straight forward to confirm the monthly earnings of salaried applicants, the same can't be said for those who are self-employed. "In these cases supporting documentation is a key element in successful mortgage applications, and the banks require financial histories for the preceding two to three years. "It usually t akes much longer to have bonds approved for these applications as they are often initially declined due to the various banks' tight criteria for self-employed individuals. Quite often clients find their own banks are not the ones that eventually issue approvals, so the service

Self-employed still struggle to obtain bank home loans

Self-employed still struggle to obtain bank home loans In spite of interest rates being at a 33-year low, banks remain very cautious in granting home loans, with all information submitted to them being thoroughly analysed to ensure applicants can afford to buy, says Kim Pistor, legal adviser and conveyancing manager for Rabie Property Group. Pistor says although it is relatively straight forward to confirm the monthly earnings of salaried applicants, the same can't be said for those who are self-employed. "In these cases supporting documentation is a key element in successful mortgage applications, and the banks require financial histories for the preceding two to three years. "It usually t akes much longer to have bonds approved for these applications as they are often initially declined due to the various banks' tight criteria for self-employed individuals. Quite often clients find their own banks are not the ones that eventually issue approvals, so the service

SA property growth loses momentum

SA property growth loses momentum Growth in SA commercial property returns stagnated in the first half of 2011, reflecting an overall slowdown and uncertainty in local and global economic conditions. Property delivered a 4.3% total return in the six months to June 2011 according to the SAPOA/IPD South Africa Biannual Property Indicator. Rental income provided the only return to investors at 4.3%, while at an aggregate level the market recorded zero capital appreciation. The disappearance of any capital growth takes the market back to the similarly flat conditions of the same time last year, after a small spurt of growth in the latter half of 2010. Although returns deteriorated across the board, some sectors of the market still provided glimmers of growth. Retail property remained resilient, managing to produce 0.4% capital growth in the six months. Offices posted just 0.1% capital growth with the overall sector returns adversely impacted mainly by the performance of inner city off

'Huge savings to be made by selling properties faster'

'Huge savings to be made by selling properties faster' Homeowners can cut up to two months off the average time it takes to sell a property by getting the asking price right from the start. So says Berry Everitt, MD of the Chas Everitt International property group, who points out that sellers who do this stand to save a substantial amount in holding costs, as well as sparing themselves a lot of anxiety and stress. "According to the most recent FNB survey," he notes "the current average time for a home to be on the market before it is sold in 106 days. But a recent analysis of our sales in various areas around the country revealed that homeowners who make use of our Market Value Report to determine the correct asking price at the start of the marketing process are achieving a sale in an average of 44 days. "And the savings they achieve through this two-month reduction in selling time can be considerable. On a home bonded for R850 000, for example, the mo

New property development at V&A Waterfront

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New property development at V&A Waterfront The construction of a six-storey office building at the V&A Waterfront is one of its largest developments since it was established 22 years ago, said its chief executive, David Green. Green was speaking at yesterday's sod-turning ceremony to mark the construction of the new building which is officially named No 1 Silo. The building is part of a R1 billion development that will extensively refurbish the Clock Tower Precinct over the next four to five years. "One of the key differentiators of No 1 Silo will be its energy efficiency due to its unique positioning to the ocean and ability to benefit from a sophisticated sea water cooling system," he said. "The V&A Waterfront is reaffirming itself as one of the most sought-after addresses for businesses operating in South Africa. By combining ease of access, optimal parking and secure living conditions with some of the unsurpassed views in Cape Town, the V&a

Interest rate remains unchanged at 9%

Interest rate remains unchanged at 9% At the conclusion of this month's Monetary Policy Committee meeting, Reserve Bank Governor Gill Marcus has once again announced that the interest rate will remain unchanged at 9%. With some economists foreseeing a possible second dip in the market, South African consumers will welcome the news that the interest rate has not increased this month as predicted earlier this year. Although house prices continue to reflect the strain of a recovering buyers market, demand has increased and consumer confidence has remained fairly steady in the first three quarters of this year. While for many buyers access to finance and competing with the stringent lending criteria of the major financial institutions will remain an issue, mortgage finance figures are looking more positive than they have in the past. Since April 2009 the bank approval rate for home loans has increased by 19% to its current rate of 45%, however this is still less than the 80% ap

Power cut: Tshwane law firm sues council

Power cut: Tshwane law firm sues council Power cut: Tshwane law firm sues council The Tshwane Metro Council is facing a R150 000 damages claim from a local law firm, whose electricity supply was cut for two days because the council and the firm's landlord were embroiled in a battle over alleged arrears in rates and taxes. Marius Blom & GC Germishuizen Inc said they were fully paid up on their electricity bill and the rates and taxes battle had nothing to do with them, as they were mere tenants on the property. Attorney Marius Blom said in papers before the Pretoria High Court that the council couldn't just do as it pleased. "I am quite aware that it is quite a common phenomenon that the council suspends services without proper notice, and in cases where it is not entitled to do so. The only way of making good the unfairness of it all, is for this court to grant damages against the council." Blom applied for default judgment against the council as the latte

Fewer desperate sellers, but market on a knife-edge

Fewer desperate sellers, but market on a knife-edge Fewer desperate sellers, but market on a knife-edge With the relatively positive turn in the South African economy and the property market showing signs of recovery, it makes sense that fewer distressed properties are entering the market, as is being widely reported by agents handling these specialised sales. For example, Mark Brickles of RE/MAX Ultra Select, which operates in the Cape Flats and south-eastern suburbs, including Grassy Park, Strandfontein, Mitchells Plain, Lotus River, Ottery and Lansdowne, says there has definitely been a slowdown in the number of distressed properties being offered for sale. "In 2009, I would say at least half the properties we sold were in a distressed situation. "Last year at least 40 percent of our sales were made up of distressed sellers, while so far this year that figure has dropped to about 20 percent of the sellers we deal with," Brickles said. Peter Gilmour, chairman o

Tough outlook for commercial property in 2011

Tough outlook for commercial property in 2011 Tough outlook for commercial property in 2011 "When evaluating the commercial office environment, according to Sapoa's latest vacancy schedule for the second quarter of 2011, South Africa's overall office vacancy rate has now breached 10 percent." says Rodney Luntz of High Street Auctioneers. "This is a first in many years - we hadn't seen such levels since 2004. Furthermore, what are deemed popular office nodes have now experienced a decrease, including Bedfordview, Braamfontein, Bruma, Cresta, Blackheath, JHB CBD, Fourways, Greenstone, Hyde Park, Dunkeld, Randburg and Rivonia. Sandton CBD vacancies are at 9.6 percent, which is better than the situation a mere nine months ago when the vacancies in the Sandton CBD were recorded at 11.4 percent." "This being said, it must be noted that even at a level of 9.6 percent that this is a high figure. Additional new developments on the cards will cause this

Pickvest investors to discuss rescue prospects

Pickvest investors to discuss rescue prospects How much of R4.5bn can be salvaged? A meeting on Wednesday will shed light. JOHANNESBURG - Pickvest investors will meet on Wednesday to discuss the prospects of “rescuing” the companies they are invested in. The meeting will be held in Centurion at 15:00. In attendance will be Hans Klopper, who was recently appointed business rescue practitioner to seven of the eight Pickvest syndication companies. On the agenda for discussion is the business rescue process and its prospects of success. Many of Pickvest’s estimated 25 000 investors, who have invested as much as R4.5bn in its schemes, were unaware of Klopper’s appointment until a week after it happened, when it was reported on Moneyweb last Thursday. Wednesday’s meeting has been hastily convened, but Klopper says there is nothing sinister in this. Klopper says the Companies Act dictates that a business rescue practitioner must convene, and preside over, a first meeting of creditors wi

13 Tips for avoiding falling victim to property rescue scams

13 Tips for avoiding falling victim to property rescue scams Also a look at the types of scams. 1. Types of property rescue scams i) Phantom help – In this scam, the supposed “rescuer” charges very high fees for basic phone calls and paperwork that the homeowner could have done. Or, the rescuer will make promises to represent the homeowner but will not follow through. This is really a too little too late scam as the helpless homeowner usually receives too little (or no) help too late to stop the foreclosure from taking place. ii) Bailout – Here the scammer bails the homeowner out by helping them get rid of the house or giving the homeowner a loan on condition that he sign documents not knowing that he is selling his property. The way the scammers get the house varies, but each method ends with the homeowner surrendering the title of the house on the promise that they can stay on as renters and buy the house back once things have been &qu

New mortgage loans granted decline sharply in Q2 2011

New mortgage loans granted decline sharply in Q2 2011 Property Largest segment of the new mortgage market moves into negative territory. The September SARB Quarterly Bulletin provides some public insight as to patterns in new mortgage lending in the 2nd quarter of 2011. When it comes to the trend in the value of new mortgage loans granted (residential and non-residential included), it was not too surprising to see a further year-on-year decline in the value of loans granted. The overall mortgage market is dominated by residential mortgages, and this segment thus sets the trend. The FNB Estate Agent Survey’s Residential Demand Rating is a fairly good leading indicator of residential mortgage grant trends, and thus for total mortgages granted. The demand rating’s year-on-year growth, too, has been negative in the 1st 2 quarters of 2011, with agents suggesting that the market has settled after a 2009/early-2010 surge. So, after a year-on-year decline in the value of mortgages grante

Syndication directors hope to prevent R4.5bn liquidation - Pickvest ; Highveld ; PIC

Syndication directors hope to prevent R4.5bn liquidation The boards of seven Pickvest syndication schemes have resolved that the companies be placed into voluntary business rescue. They have appointed business rescue practitioner Hans Klopper, who is best known for his appointment as joint liquidator of Consolidated News Agencies (CNA), back in 2003. In total there are eight syndications in the Pickvest stable. However, only seven are envisaged for the business rescue, not eight as previously reported. Moneyweb apologises for the error. The syndication Highveld 19 is excluded. Morkel Steyn, a director of all eight Highveld syndication schemes, says in an affidavit that it was “imperative” to implement the business rescue and protect investors from liquidation and “massive losses”. Public investors have poured nearly R4.5bn into the eight Highveld syndication schemes. The lion’s share, roughly R3.5bn, has gone to the four most recent schemes, Highveld 19-22. These syndications find

Tainted credit records depress property market

Tainted credit records depress property market Tainted credit records depress property market More than 8.6 million credit-active consumers with damaged credit records were contributing to the poor performance of the residential property market this year, Jacques du Toit, the senior property analyst at Absa, said yesterday. Largely because 46 percent of a total of 18.6 million credit-active consumers were in this predicament, in the first quarter, a recovery in house prices which started last year, when house prices rose 7 percent, is rapidly fading. This year prices are rising only about 1 percent year on year, according to Absa, based on mortgage loan applications approved by the bank. And in real terms - with inflation stripped out - prices are falling. So far this year, prices of small houses had fallen 6.6 percent in real terms, medium-sized houses 3.6 percent and large houses 2.5 percent, Du Toit said. A similar trend in residential property was noted by Standard Bank on W

Home loans up as banks relax lending rules

Home loans up as banks relax lending rules Home loans up as banks relax lending rules At the height of the property boom in 2006, South Africa's four major banks were approving an average of more than 30 000 new home loans every quarter. During 2009 this number had dropped to well below 8 000 as banks tightened lending criteria considerably in response to the global financial crisis, as well as factors such as interest rate increases, high household debt ratios and the effect of the National Credit Act. However, with sharp cuts in the repo rate over the past couple of years, the prime lending rate has dropped to below its 2006 level and, according to Lightstone property analysts, all indications are that banks have been slowly relaxing their lending criteria again. The result is that the number of new home loans approved is on an upward trend again, having increased by 10 percent since 2009. Lightstone recently completed a study of the number of home loans approved per quar

Plan for property taxes along corridors like Gautrain

Plan for property taxes along corridors like Gautrain : Property News from IOLProperty Plan for property taxes along corridors like Gautrain Owners of land along public infrastructure corridors like the Gautrain could be slapped with additional taxes as municipalities seek to augment thier revenues to close the widening gap between their expenditure needs and available funds. Mayur Maganlal, the excecutive director for economic development and planning at the SA Local Government Association (Salga), said last week a possible source of additional revenue could be a tax on land along public infrastructure corridors like the Gautrain. Land values on these corridors typically arise as a result of the investment in infrastructure. The Gautrain has also spurred a number of commercial and residential property developments around its station nodes. Areas around Gautrain stations, including Rosebank, Sandton, Hatfield, Marlboro and Rhodesfield, have commercial and residential property dev

Nedbank backs inner city development

Nedbank backs inner city development Nedbank Corporate Property Finance has again thrown its weight behind urban renewal and the revitalisation of the inner city by backing another development in the CBD of Johannesburg, the powerhouse of Africa. In a R41 million finance deal, Nedbank has backed the redevelopment of the existing nine-storey building at 16 Frederick Street in Marshalltown into a modern residential apartment building. Once completed, the property will boast a total GLA of 4 503m2, consisting of 138 residential units, including 68 studio units, 48 one-bedroom units, 17 two-bedroom units and five duplexes, as well as 300m2 of retail space on the ground floor and 36 parking bays in the basement. A sales agreement has already been concluded with Diluculo Investments (Pty) Ltd for the purchase of the building based on the rental return calculation, on completion of the refurbishment. The deal forms part of Diluculo’s long-term strategy to acquire residential units specifi

Investec Property Fund to expand property portfolio

Investec Property Fund to expand property portfolio Proposes R185m acquisition of two prime commercial properties in Gauteng. Investec Property Fund Limited (“The Fund”), Investec’s recently launched listed property vehicle announces its intention to acquire two new properties as it grows its portfolio of quality South African real estate. This proposed transaction marks the Fund’s first acquisition since listing in April this year. The total value of the transaction will be R185 million, which will be paid in cash and funded initially by way of a bridging loan facility provided by Investec Bank. Commenting on the news, Sam Leon, Chief Executive Officer of The Fund said: “As the first acquisition for the Fund, these are two attractive properties, in prime locations with strong tenants, which we believe offer good value at an attractive yield, which will enhance the earnings and growth prospects of the Fund.” The properties are both located in Gauteng, in strong commercial areas. Th

End of the road for disastrous luxury North West development (Platinum Planet)

End of the road for disastrous luxury North West "Metsi Pepa" development Only a portion of investors in the controversial and now defunct luxury Metsi Pepa development in the North West province can expect to get a percentage of their money back, depending on who they paid their hard earned cash to. As recently as July 13 2011, developers Nicola and Jaco Prinsloo promised investors that the project was on track and that the development would be completed towards the end of the year. But, last week Nicola Prinsloo and her attorney Johan Botha confirmed to Moneyweb that the land had been sold to government for less than 30% of its commercial value. A settlement was reached with the Department of Rural Development after protracted negotiations. Botha says investors who paid deposits or full amounts when the development was first sold in 2007 will be able to apply for compensation, with conditions, and this is where the waters become muddied. More than 200 people invested t

Young property buyers make a comeback

Young property buyers are reportedly making a comeback and supporting the residential property market in South Africa thanks to improved market conditions. According to the FNB Property Barometer First Time and Age Group Property Buying Q2 2011, an estimated 25 percent of buyers were first-time buyers. This is up from 22 percent in Q1 2011 and higher than the low of 12 percent reached in Q3 2008 as the recession hit. FNB Home Loans property strategist, John Loos, says this reflects improvement in the property market since the 2008 recession and the peak in interest rates. “The percentage of young buyers would also suggest an environment still far more benign than early last decade where the 20 and the under age group reached a 20.6 percent peak in 2001,” says Loos. He explains that since 2009, there has been evidence of something of a young buyer comeback both in the FNB Estate Agent Survey and the Deeds Office data for property purchases by individuals. Long before tightened

FNB house price index up 6%

FNB house price index up 6% FNB house price index up 6% August FNB House price numbers are providing a mixed picture for the residential property sector according to John Loos, property market strategist at FNB Home Loans. In year-on-year (y/y) terms, the FNB House Price Index growth rate continued to accelerate, he said; the index rose by 6.1% y/y in August. This represented an increase on the revised growth rate of 4.8% for July and a reflection, with a lag, of the mild resurgence in demand in the summer of 2010/11. Loos said that in real terms, adjusted for CPI inflation, the y/y percentage change for July was still mildly negative to the tune of -0.5%, given that CPI inflation in July was 5.3% and the revised nominal house price growth rate for that month was 4.8%. Given the further acceleration in nominal house price growth in August, it was quite possible that last month would show the first positive real y/y house price growth since October last year. He said t

Banks prefer to bond wealthy properties

Banks prefer to bond wealthy properties The proportion of bonded property showed an increase within the wealthy and affordable price segments from 2006 to 2010. A recent study conducted by property analysts Lightstone indicates that South African banks prefer to bond high-priced property worth R1.5m or more, as buyers of these properties are considered less risky and more -likely to pay their bond repayments. The proportion of bonded property showed a general increase within the wealthy and affordable price segments from 2006 to 2010, and this decreased proportionally for the comfortable price segment - even though the majority of properties sold in South Africa fall within this bracket.

Property market needs stimulation

Property experts reckon a cut in the interest rate by the Reserve Bank would be a positive move for the South African property market. However, it is unlikely to change the pedestrian rate at which property prices are increasing, says Herschel Jawitz, chief executive officer of Jawitz Properties. “It will certainly give consumers more confidence in the economy and ease their financial situations. “There is no doubt that there is a strong relationship between consumer confidence and the demand for property,” says Jawitz. He says at the moment, buyers are under pressure and are cautious about putting pen to paper when it comes to making offers. As a result, he feels an interest rate cut would add some impetus to the market and at least hold property prices in positive nominal gain territory. Homeowners still under pressure to keep their homes would welcome a cut in rates and give them a chance to catch up or remain current on their repayments. The fewer distressed sellers and

Absa lends up to 100 percent home loan

Absa says it is still giving 100 percent loan-to-value to would-be home buyers even in this market but only if they qualify. According to Sifiso Shongwe, managing executive of Absa Home Loans, loans are being granted across the board to applicants who qualify - meaning they have a good credit rating. “Since the National Credit Act came into effect, the dynamics have changed and as banks, we have to exercise responsible lending,” says Shongwe. He says as a bank, they have a target they would like to reach in terms of ensuring South Africans access finance to buy homes. Without giving any figures, he says they have not surpassed that target as yet. “The focus of demand for and supply of housing is set to be on smaller-sized and higher-density housing because affordability is set to remain a key factor into the future,” he says. Shongwe says in the current economy, owning a house has become beyond the reach of many South Africans and innovative products both in physical housing

Estate agents' board readies to go belly up : Property News from IOLProperty

Estate agents' board readies to go belly up : Property News from IOLProperty The Estate Agency Affairs Board appears to be imploding, with two senior members suspended, nasty, mass e-mails being sent and accusations of fraud and corruption flying around.

Liberty plans 60 floor Sandton office tower

Liberty plans 60 floor Sandton office tower Liberty Properties, owned by insurer Liberty Group, is planning a 60-storey plus office Tower in Sandton City following its over a billion rand upgrade of the precinct, but says it does not expect work to start before 2013 as tenants need to get a breather from construction. Sandton City generates income of R600m on an annual basis from the complex and office space. Liberty Properties owns 75% of Sandton City and is the largest single asset within the property portfolio, which consists of 33 properties “What we are doing at the moment is phase one. What we will probably have is a three phase master plan. There are plans which have to be approved by the board ... The plan is to do another phase which will include office space. The real work I would not see it starting before 2013. We need to give the centre some time to breathe,” Ogbu said. Currently Sandton City is undergoing a facelift, scheduled to be ready by November 10 this

Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!