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| How Municipal Rates Will be Working |
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Have you heard of the Municipal Rates Act? What does it all mean? Everyone is speaking about valuers, and rates and taxes going up.
It's not enough to have load shedding and xenophobia issues, one may think to oneself, but another rates hike seems like overkill under the current economic circumstances. To be fair, we have to look at the facts.
Rates and taxes have traditionally been charged on municipal valuations – these have been extremely low, and undoubtedly the council had serious catching up to do to reach market values. You should be paying rates and taxes on the market value of your land and improvements on land. This is what the Municipal Rates Act has remedied.
| Biccari Bollo Mariano Attorneys, 27-07-2008 |
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| Rental Market will Boom Now - Buy To Let Way To Go |
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Today’s interest rate hike of 50 basis points, resulting in a prime of 15,5 percent, will further heavy South African home-owners’ debt burden, and increases the repayments on mortgages
This development, however, now sets the scene for a booming rental market with excellent prospects for certain investors, reports RE/MAX of Southern Africa and BetterBond.
The price boom of the last decade pumped up the capital values of property, outstripping the rises in rent which is typical of a bull market in house prices.
Because of affordability issues now faced in the current market climate, this driven by today’s interest rate hike, increased food and fuel costs, and banks tightening credit criteria (the unavailability of 100 percent bonds), rental properties will be in greater demand, as a proxy for homes, which are becoming more difficult to obtain.
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| Factors When Buying Property Offshore |
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If you are contemplating buying an offshore property – as a small percentage of South Africans do each year with a view to spreading their investment base and/or securing themselves a holiday home – which destinations, right now, offer the best prospects?
Lanice Steward, managing director of Anne Porter Knight Frank (APKF), has drawn attention to a survey, Knight Frank's (KF) Annual Wealth Report, in which one section sets out to assess the ten fastest up-and-coming residential markets worldwide.
These, in KF's view, are Portugal's Silver Coast, Singapore, Bahia (in Brazil), Morocco, The Seychelles, Croatia, the Italian Riviera, Granada, Mauritius and perhaps surprisingly, the USA – where recent falls in price values have made many buys good value and where certain rural destinations, says Knight Frank, are still competitively priced.
| Anne Porter Knight Frank, 09-06-2008 |
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| More Rate Hikes Would Be Perilous |
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Reserve Bank Governor Tito Mboweni's recent signal that interest rates would rise again this year because inflation pressures had spread far beyond food and fuel, is already having an impact on the residential property market
The combination of a decreasing property values with increasing interest rates has put the residential property market in a precarious position this year. Anecdotal reports of rising repossessions and a surge in forced sales is now spreading to various parts of the property market, particularly those in the R2m to R5m valuation range.
"Mortgage stress is spreading across all cities, suburbs and demographics. Over-extended middle income families are obviously the most vulnerable but wealthier South Africans are now also being affected by a slowing residential property market,' says Alliance Group's chief executive, Rael Levitt.
| Alliance Group Research, 06-06-2008 |
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| Century City Developments Short-Listed at SAPOA Awards |
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No less than four recent developments at Century City were selected as finalists in the 2008 SAPOA Awards for Innovative Excellence in Property Development continuing a proud tradition of previous years
The new finalists include the Liberty Life Regional Offices which were completed last year. The 20 000 square metre building, which includes 440 basement parking bays, 140 external bays, a medical suite, in-house canteen, training facilities, meeting rooms, executive boardrooms, dining rooms and pause areas on each floor, enjoys spectacular views of Intaka Island nature reserve and Table Mountain. The contemporary building was designed by Louis Karol Architects.
The three other Century City developments to be shortlisted all fell within the same “other” category which includes hotels and leisure, residential and mixed use developments.
Two residential developments, The Oasis Luxury Retirement Resort and KnightsBridge also made it to the shortlist with Oasis winning a merit award at the 2008 Sapoa Convention at the Cape Town Convention Centre last week.
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| Dubai Appears on SA Radar Screens |
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More buying opportunities are opening up to South Africans in Dubai, as the government of the United Arab Emirates (UAE) state continues to tweak legislation to boost foreign investment in its rapidly expanding real estate market
Developers have been quick on the uptake, pouring millions into new residential projects to satisfy the expected surge in demand for real estate among foreign investors, giving rise to claims that Dubai is currently home to 30% of the world's construction cranes.
Omar Khan, director of customer services centres at the Dubai Chamber of Commerce and Industry, told a group of SA journalists on a media trip to Dubai last month that some 270 000 new residential units are expected to come on stream in Dubai within the next three years. Prices for these units range roughly from R10 000m2 right up to R100 000m2. Top-end apartments in some of Dubai's most iconic developments such as Palm Jumeirah, the man-made island in the shape of a date palm stretching into the Arabian Gulf, and the sky-scraper Burj Dubai, the tallest man-made structure in the world, are selling for as much as R260 000m2.
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| Hermanus Property Popular with SA Buyers |
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Residential property in the coastal town of Hermanus in the Western Cape remains sought after among home buyers around South Africa
"While Hermanus's property market has experienced a slowdown in activity, as has the rest of the country, we are still seeing a strong demand among leisure buyers as well as a growing trend towards Gauteng purchasers," says Pam Golding Properties (PGP) area manager Adrian Kuiper.
In regard to the latter, he says a growing number of these are seriously considering the option of relocating to the Cape with the intention of commuting to the workplace, while others are looking at a permanent relocation. "The reason is that they require a secure base that is not threatened with perpetual crime, and generally, they are looking to buy mainly in the price range between R5m and R8m," says Kuiper.
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| Pace of House Price Growth Slowed Further in May |
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Property Trends - House Price Index
Based on the latest Absa House Price Index, house price growth dropped further to a
nominal 4,3% year-on-year (y/y) in the middle segment of the market (see explanatory
notes) in May this year, down from a revised 5,5% in April. It was the lowest nominal
year-on-year price growth recorded since October 1999, when it was also 4,3%, and
brought the average price of a middle-segment house to about R960 700 in May.
In real terms, house prices in the middle segment of the market dropped by 5,0% y/y in
April 2008, compared with a decline of 3,4% y/y recorded in March, based on headline
CPI inflation. This was the biggest real year-on-year drop recorded in house prices since
March 1997, when it was at a level of -5,2% y/y, based on nominal price growth of 3,9%
y/y, and a headline CPI inflation rate of 9,6% at the time.
| Absa Group Economic Research, 05-06-2008 |
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| South African Investors Urged to Create Opportunities Elsewhere in Africa |
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South African property investors have to start investing in the rest of the continent because there are major opportunities that are being overlooked
“At the moment we (SA) are an island of prosperity in a sea of decay.” He says the xenophobia that is raging in SA will not “go away until we start investing in the economies around us”. “People come to SA because they are looking for opportunities. We must create those opportunities in their own countries.” Van der Vent says South African property companies should start developing infrastructure and focus on developments such as shopping centres, offices and private hospitals in neighbouring countries such as Mozambique. He says while there are risks attached to developments in other parts of Africa, there is also money to be made.
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| Property Investing Differs Globally |
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There has been a lot of recent focus on South African property investors looking beyond their own borders because of home markets being too small and too competitive
This could also be because, to use the words of Leon Allison, an analyst at Macquarie First South, "investors don't only want to be exposed to the rand and the South African economy".
"There are yield opportunities around the world and in South Africa the national sport is hedging. This has effectively led to investors wanting to diversify – to go offshore and global," says Patrick Sumner, head of Property Equities at Henderson Global Investors.
He advises though investors should keep in mind that global real estate is a patchwork of a variety of real estate around the world. "There is no global real estate market per se," he says.
"Real estate is a difficult and complex game, and each country has its own set of rules and legal tax.
"It's a case of 'I am a genius in Johannesburg but will I be a genius in New York?'. This is not always the case. Success at home doesn't mean success in a foreign market."
| Global Trends and Development Prospects Group, 02-06-2008 |
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