SA property worth trillions

Johannesburg - The South African property sector is worth R4.9 trillion, the Property Sector Charter Council said on Tuesday.

CEO Portia Tau-Sekati said this emerged from a new study to determine the size and value of South Africa's property. "Establishing the scope of the property sector is important for an accurate overview of the economy, taking into account that in 2009 the property sector contributed 8.3% of SA's GDP," she said. She said the research - the first of its kind - created a "hub of knowledge" of the property sector. It consolidated information by developing a common and consistent understanding of property in the country. "We are moving towards a proper baseline measure to assess market size and its components," she said.
  
"The scale of different services and activities within the sector and ultimately BEE transformation figures (are) in line with the Property Sector Code scorecard." The study found that 1% of land in the country was urban and residential, over 73% was natural pasture, and 12% agricultural. Two-thirds of property owned in South Africa was residential and estimated to be worth R3 trillion, while the commercial property totalled R780bn. The research combined various studies which estimated the size of the country's residential market. The number of houses in the country varied between eight and 13 million in the studies. "Besides being a benchmark to monitor and evaluate the progress of transformation of the sector each year, this study marks the beginning of an ongoing research process, which will update information on the property sector annually," Tau-Sekati said The study would be a useful tool for understanding the South African property market and its dynamics, she said.

Braamfontein accommodation on the university's doorstep

It’s described by some as the northern gateway to Joburg’s city centre, specifically via the impressive Nelson Mandela (suspension) Bridge that spans the dozens of railway lines in the shunting yards outside the Johannesburg train station. To others, Braamfontein is a hub for the arts, entertainment and education just off the M1 freeway connecting the city’s older, central precincts with the newer suburbs to the north. And to anybody travelling through Braamfontein it’s a place of high-rise buildings, office blocks, flats and apartment buildings with shops of various types lining many of the streets.

Here you’ll find the boardrooms of major corporates, the campus of the Witwatersrand University (Wits), the Johannesburg Theatre (formerly The Civic), the 5th Dimension College of Visual Arts, the Neighbourgoods Market and hotels including the Parktonian and the Devonshire. There aren’t any houses to speak of in Braamfontein, but there’s a huge variety of residential options nonetheless.

You can rent a great unfurnished, one-bedroom bachelor pad (with access to a pool) for around R4000 a month – in fact you can get a semi-furnished bachelor flat for the same amount. R4500 a month will get you a comfortable, fully-furnished bachelor flat, and for a bit more room plus covered parking, there are one-bed roomed apartments going for R5000.

For a spacious two-bedroom, two-bathroom apartment in a well-maintained building with 24-hour security and within walking distance of Wits and the University of Johannesburg, you’re looking at paying R5500 to R6000 a month.

R250 000 to R400 000 is the range that most decent flats and apartments are selling for in the Braamfontein high-rises.

If you’re looking for clean, safe and affordable accommodation in Braamfontein, it makes sense to deal through agents who are very familiar with the territory and, better still, based in Braamfontein. Blue Label is just such a company, plus they specialise in buildings with security personnel on site, high tech security equipment such as finger-print readers and cameras, and they are continually refurbishing their buildings, inside and out.

There were several positive indicators for the residential property market

JOHANNESBURG - These included continued year-on-year growth in property prices, especially for first-time buyers. Simultaneously, there had been a decline in the size of the deposit required.

"The average purchase price in July 2012 was R846, 863, up 3.1 percent from R821, 579 in July 2011," said ooba. For first-time buyers, the average purchase price had increased by 7.8 percent year-on-year, from R609, 417 in July last year to R657, 069 in July this year.

However, the month-on-month purchase price statistics did indicate a trend of slowing growth in property prices, in line with slowing economic growth.

"Of our total intake of bond applications in July, 53 percent were from first-time buyers, a five percent increase from last year," says Rhys Dyer, ooba chief operating officer.

"The sustained higher levels of first-time buyer activity are underpinning good year-on-year growth in property prices in the first-time buyer segments." The average home loan deposit had reduced from 15.1 percent of the purchase price in July last year to 12.6 percent of the purchase price in July this year.
"The reduction in deposits is a good indicator of bank credit appetite, reflecting improved access to finance for home buyers with limited deposits," ooba said.

As a further indicator of credit conditions, the approval rate had risen to in effect 65.3 percent of loan applications, from 64.2 percent last year. This increase was driven by a "healthy improvement" in the percentage of applications which were declined by one bank, but approved by another, from 23.1 percent of applications last year to 27.6 percent this year.

The trailing approval rate, including loans approved after month-end, was 68.6 percent. These improved lending conditions continued to drive strong year-on-year value growth, said ooba.

Home loan applications had seen a 28 percent increase in value, while the value of home loan approvals had increased by 38 percent in July --ooba's best monthly performance since 2008.

The Reserve Bank's decision to drop interest rates in July by a further 0.5 percent was likely to add a further mild stimulus to the lending environment, improving buyers' ability to qualify for loans. "This, coupled with the improvements in approval rates and average deposits, is likely to sustain the current higher levels of lending activity," said Dyer.

 

Article from the Citizen

High returns for Joburg inner city apartments

JOHANNESBURG – A new index on the performance of property in the Johannesburg inner city has indicated that apartments there have delivered compound returns of 17% per annum, over the past eleven years.  Townhouses have also performed well, delivering returns of 12%.

Property specialists, Citiq, have launched The Citiq City Index based on relative price performance of the Johannesburg inner city apartment market and a selection of townhouse developments in the Johannesburg metropole from January 2000 to December 2011.

Citiq CEO Paul Lapham says the returns are on capital and that investors should factor in the rental income that would have been generated over and above this. “Even after the property crisis of 2008, townhouses have continued to show consistent price growth, with prices since 2009 growing by an average 4% per annum in nominal terms.

“Over the same period the inner city apartment market grew in price terms by 8% per annum, although with significant volatility from year to year,” Lapham said.

Lapham explains that an investment of R100 in a city apartment in 2000 would be worth R567 today. He says a comparable investment in a townhouse would today be worth R332. “Both markets did exceptionally well during this period, benefitting from the property boom that lasted until 2008,” Lapham added. 

He has attributed the strong performance of the inner city market, albeit from a very low base, to continued regeneration of the city, supported by both private and public sector initiatives. Lapham says the introduction of urban development zone tax incentives also contributed to large scale private investment into the city. The Johannesburg Development Agency and the Johannesburg Social Housing Company have also made significant investments in infrastructure and housing in the area.

Citiq has been involved in the inner city and townhouse market since 2005 and owns and manages more than 3 000 apartments and townhouses in the city.  Head of Citiq’s analytics department, Razia Cleland, says the index is based on sectional title sales in the Johannesburg inner city and selected suburbs with high densities of townhouses like Honeydew Ridge, Winchester Hills, North Riding, Weltevreden Park and Randpark Ridge. The inner city comprises 20 suburbs and includes Yeoville, Berea, Braamfontein, Troyeville, Selby, Highlands North, Jeppestown and Joubert Park. 

The index uses the average price per square metre to compare the two markets. Cleland says: “Using the square meterage of apartments provides a useful benchmark of what people should be paying for apartments, although we would urge people to be cautious to take into account the condition, location and type of apartment they are buying when using the index as a benchmark for their own purchase decisions.”

Lapham says the average price per square metre of property sales in the inner city apartment segment was roughly R2 800 in 2011. This was up significantly from R471/m² in 2000. He adds these returns do mask significant volatility with the inner city market having been adversely affected by the 2008 property crisis, only showing a recovery to 2007 levels as late as 2011.

He adds the historical price performance of both townhouses and the inner city apartment market have been a stable investment for homeowners, which together with rentals accrued have delivered inflation beating returns. Lapham says given the benefits of living close to the city and subsequent savings in transport costs, he believes the inner city apartment market will provide long-term growth prospects for investors and homeowners.

Author: Micel Schnehage

 

Property values head north in South Africa as Johannesburg outperforms London, New York and Eurozone crisis drives returns in new safe-havens

It claims to be the lightning capital of world, but however dubious this title may be, Johannesburg has avoided being struck by the global property crash as its offices, shops and warehouses outperformed those in every other global city outside of South Africa over the last decade.

Commercial property is a key measure of economic vitality, since strong retail, leisure and industrial performance encourages investors such as pension funds to buy up buildings to earn income through rental income and capital value increases.

Capital value appreciation in Johannesburg has hit 7.5 per cent over the ten years to 2011, compared to 3.6 per cent percent for New York, 2.2 per cent percent for London and -0.1 per cent percent for Munich over the same period. 

Like Johannesburg, Sydney, Melbourne and Seoul remain (relatively) untainted by European contagion and investor appetite has been growing in these locations. 

However, despite their growth over the last ten years, 2011 saw returns in the more conventional investment locations of London and New York improve considerably, as investors searching for safe havens put increasing pressures on limited stock. Last year, values in London rose by 6.0 per cent, in New York by 8.6 per cent and in Munich by 3.6 per cent - whilst in Johannesburg saw growth slow to just 0.4 per cent. 

Peter Hobbs, IPD’s senior director, said, “The picture for global real estate is a tale of havens and have-nots. Institutions want safety, and at the minute, that means low-yielding prime office or retail in safe haven pockets around the world.” 

“As a result, there’s been a real polarisation between the likes of Dublin and Madrid against the financial centres of London and New York, and the commodity rich cities of Calgary, Perth and Capetown.” 

“Unlike gold or other commodities, real estate is a living, breathing asset that generates income through its tenants. Properties with good leases held by strong tenants tend to be attractive to institutions sheltering from the volatility of global markets.” 

“It is for these reasons that these two different types of market have tended to perform well over the past couple of years. On the one hand, the financial centres of London and New York benefit from the quality of real estate and tenants as well as market transparency and liquidity that has attracted capital from many global investors. On the other hand, the commodity-driven cities of Australia, Canada and South Africa have benefited from the strong fundamental demand for real estate in these markets.”

 

Article by http://www.sacommercialpropnews.co.za

 

Johannesburg is safer than Cape Town according to the Most Violent Cities Report.

 

The past two years saw a few notable improvements to South Africa’s reputation abroad: we hosted a very successful Fifa Soccer World Cup, Table Mountain officially became one of the 7 Natural Wonders of the World and Cape Town will be the 2014 World Design Capital. 

This week sees another boost, of sorts: it transpires that, contrary to the stereotype of darkest Africa, South Africa is not high on the list of the most dangerous places to visit.

The Citizen Council for Public Safety and Criminal Justice (an NGO in Mexico) released their report of the 2011, 50 Most Violent Cities in the World (link: http://emergingterrains.com/investmentnews/mexico/the-most-violent-city-in-the-world-is-in-honduras-mexico-has-five-of-the-top-10/). 

The report focused on urban areas with more than 300 000 inhabitants where murder statistics are available. The Council then looked at the murder rate per 100 000 people. Arguably not surprising is that the top 5 cities are all in Mexico. In fact 40 of the 50 most dangerous cities are all in Latin America.  

What does come as a surprise to many is that Cape Town, beautiful, laid back Cape Town comes in at number 34, Port Elizabeth at number 41, Durban takes the 49th place and Johannesburg the 50th slot. Had anyone locally had to make a guess a week ago, Johannesburg would almost certainly have come out heading the list.

As such, while it is by no means commendable to make a list of the most violent cities in the world – being lumped together with established dangerous zones like Ciudad Juarez in Mexico or Cali in Columbia – Joburgers might have been pleasantly surprised and one could forgive them for sharing a snigger or two at the news. 

The City of Gold might not have a world famous mountain or the ocean but, it is a great town for doing business in and, one could hope that people’s perspectives on how dangerous it is might be altered, even if ever so slightly, by the news that it’s not quite Sodom and Gomorrah.
 
Of course, first prize would be not having any area of South Africa on the list at all but, in the meantime the silver lining might be that prospective property buyers will take another look at Johannesburg. “Joburg is a fantastic city brimming with opportunities for entrepreneurs. It vibrates with energy and is a great place to live. It’s worthwhile taking a look at the local property market and this news can’t hurt”, says Jan le Roux, CEO of Leapfrog Property Group.

 

PROPERTY IN JOHANNESBURG - CPA

Since the introduction of the Consumer Protection Act in South Africa there are many more services that you can expect from an estate agent when looking at properties in Johannesburg. The Consumer Protection Act is however not just there to protect you but the rights of a property owner as well as the obligations and responsibilities of the estate agent. With all these new rules in place property may be a bit more complicated to come by but at least every party in the transaction knows exactly where they stand. The Consumer Protection Act relates to both rental properties in Johannesburg as well as properties that are for sale. Properties for Sale and the Consumer Protection Act There are two main ways in which the Consumer Protection Act affects properties for sale in Johannesburg. In the past buyers who put an offer in to purchase a property were obligated to finalise the purchase and could not change their minds. The first way in which the Consumer Protection Act protects potential property buyers is by providing a five day period in which they have the option to withdraw an offer to purchase. Once this five day period expires the buyer is obligated to purchase as before Before the introduction of the Consumer Protection Act all properties in Johannesburg and in South Africa were sold ‘Voetstoots”. This is no longer the case and the owner as well as the estate agent must point out any defects or problems with the property before an offer is made. The owner is then responsible to make any necessary changes or repair and can alternatively cover the costs of any necessary work on the property. Rental Properties and the Consumer Protection Act There are numerous ways in which lease agreements have been changed according to the regulations in the Consumer Protection Act. The most important of these changes is that no lease agreement may have a term of longer than 24 months or two years. After the expiration of the period the property owner and renter can come to an agreement to extend the lease period for another two years. Prior to the Consumer Protection Act there was no way out of lease agreement for either the Lessee or Lessor unless both parties agreed to terminate the agreement. Now however the renter and the owner only need to give a 20 day notice that they will be terminating the agreement. However, the owner can only give notice of termination if the Lessee is in any way in contravention of the lease agreement. There are many more factors that have changed with regard to the leasing of immovable properties in Johannesburg. Whether you are a property owner or wish to rent a property it is very important to make sure you know about these factors and how they will affect your rights and responsibilities as they relate to the rental property. Your nearest estate agent should be able to assist you in ensuring that your rights are covered whether you are renting or buying a property.