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| New Hotel Developers have to Get Up Early to Catch 2010 Visitors |
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Mega-Billion-Rand hotel developments and resorts are taking shape across South Africa. Most of the developments under construction, range from ultra-luxury five- star hotels to exclusive spa resorts.
Protea Hotels has at least three developments worth over R520-million under construction; and a joint venture with the Extreme Group, founded by Alistair Gosling, opened its first Extreme Hotel in Cape Town in November last year. The partnership plans to invest more than R2.8-billion to roll out a chain of Extreme hotels, which are aimed at the backpacker market.
The UK and Dubai-led consortium, Istithmar, that bought Cape Town’s landmark Victoria & Alfred (V&A) Waterfront for R7-billion last year is investigating new five- star hotel and resort developments on “Africa’s Riviera” ahead of the 2010 Soccer World Cup. Istithmar plans to splash out another R7-billion on marinas, new shopping developments, apartment blocks, offices and a 250 bedroom luxury hotel and resort hotel.
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| South African Property Feels Economic Drivers |
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Economic drivers seem to have a big impact on South Africa's property market
So says Prof Francois Viruly of Viruly Consulting, who adds that we have a changing environment around us from a property perspective.
"Our inflation rate is 6% and our gross domestic product (GDP) growth is 4% to 5%. But that's not that interesting. Stoep talk is interesting or anything you can't find on Google."
On an economic level, Viruly says a few large institutional investors previously determined what happened in the property market but that that has changed fundamentally.
He also points out that the new cities of gold are not places that people would normally associate with a booming property market, but that that is where they go wrong. "With the way the platinum market and commodity prices are going at the moment, the cities of gold are critical and do matter."
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| Residential Property Prices Outrun Rentals |
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Residential rentals have not remotely kept up with house-price growth over the last few years
According to surveys conducted by Rode & Associates, rentals of flats, townhouses, and houses generally grew at a compound rate of roughly 4–8% over the last three years. This should be contrasted with a compounded national house-price growth rate of 19,3% p.a. over the same period. The result of this divergence in growth rates is, of course, the low net-income yields of 4-6% that residential investors currently face.
On the positive side, however, residential rentals did generally beat consumer inflation, which averaged about 4,5% p.a.
Some of the better-performing markets included the Durban house market where rentals grew by 12,9% p.a., Port Elizabeth’s flats (11,2%), and Bloemfontein’s townhouses (10,4%).
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| Foreign Property Buyers Do Not Influence Affordable House Prices |
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Sales to foreign investors of free market properties can influence top end property prices, but have no effect on the affordable end of the market
So says Barak Geffen, Executive Director of Sotheby’s International Realty South Africa who says statistics from South America’s property market shows despite high average house prices, foreign investors do not affect the price of affordable homes in that market.
Figures show Brazil’s shortage of affordable housing is far worse than SA and growing.
“Brazil has government legislated financial mechanisms in place to relieve pressure and build more affordable housing.
“About 20% of its wage bill is put into a UIF fund and of which 65% must be spent on housing either directly by providing home loans or by lending to developers.
“Brazil’s population is about 185 million and the shortage of formal housing stock is about 8-million housing units or 14% of the total market requirement. In South Africa where the population is about 44 million we have a shortage in this segment of 2,6, which is acute but not as bad as the Brazil model.”
| Sotheby’s International Realty, 13-08-2007 |
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| Major Facelift for Johannesburg |
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Plans in pipeline for high-rise blocks in posh neighbourhoods
The plans, tabled in three proposals before the Joburg council late last month, under the Urban Development Framework document, have been put in place to ensure the success of Gautrain and the city's R2-billion Bus Rapid Transport System.
The documents contain the council's vision for Sandton, Rosebank and Marlboro, all of which will have Gautrain stations. The plans, which were passed by the council, will now be subject to a public-participation process at a council sitting on July 26.
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Will the commercial property development boom be halted by the uncertain interest rate environment
Property analysts do not think so, saying any additional costs from a rising interest rate environment will be passed on to prospective tenants by developers raising rentals.
Because there is a shortage of vacant space in the commercial property market, tenants will also be forced to accept increased rentals as they do not have many options when it comes to finding suitable unoccupied space .
The commercial property market has been experiencing boom conditions over the past few years, with property values increasing dramatically. Demand has mopped up most vacant space and sparked an increase in new property developments coming to market.
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| Longer Delays For Property Developers |
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Developers could face longer authorisation delays following a court judgement that emphasises socio-economic factors and gives ammunition to objectors
John Loos, property strategist for FNB Property Finance, is of the opinion though that this judgement will not have much effect on developers.
A recent Constitutional Court judgement, the Fuel Retailers Association of Southern Africa case, has highlighted the need to separate town planning criteria from environmental decision making dealing with the "sustainability" of a development and its impact on social and economic factors.
"In addition, the judgement looked at the legitimacy or otherwise of the practice of trade competitors who tend to lengthen the authorisation process by raising environmental objections for other than ecological motives," comments Glendyr Nel of Shepstone & Wylie Attorneys' environmental law department.
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| Cape 2010 Stadium Plan Wins Approval |
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A special sitting of the Cape Town city council has approved the final building plans for the city’s 2010 World Cup soccer stadium in Green Point
With tight deadlines facing the city, construction is already five weeks ahead of schedule, but the city is still being haunted by a legal challenge from activist group, the Cape Environmental Protection Agency (CEPA).
The challenge seeks to review the legality of the various provincial and council decisions taken in the lead-up to secure the new stadium site on the Green Point Common.
The hearing was "indefinitely postponed" after it was found the scale and complexity of the case and the work, which had to be done before it could be heard, meant that lawyers would not be ready on August 13.
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| Cape Town Convention Centre to get R800m Growth Boost |
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Cape Town's highly successful international convention centre had been given the go-ahead to start an estimated R800m expansion
Rasool confirmed that Public Works Minister Thoko Didiza had said at the weekend’s presidential imbizo in the province that her department had agreed to put Customs House “at the disposal” of the centre.
The convention centre last year hosted 46 international conventions and the joint partnership between the province and the city council had been a runaway success story, attracting thousands of business tourists in the meeting, incentives, conferences and exhibitions sector, seen as the key to boosting SA’s tourism industry.
Rasool said at the opening of the Southern African Association for the Conference Industry’s national conference in Cape Town on Monday that negotiations had been in progress for the past two months with Didiza on the future of Customs House.
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| Traffic a Key Factor in New Property Developments |
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It will become increasingly important to invest in property close to work, business nodes and key transport routes
As congestion on South African roads increases , residential property areas situated on major transport corridors and near businesses are going to become sought after “hot spots”, says John Loos, property strategist at First National Bank.
Loos says this situation is going to happen increasingly rapidly over the next five to 10 years.
“I t is realistic to expect that by early next decade we could have a million new vehicles coming on to the roads each year. At the moment, it is nearing 700000. ”
He says it will be increasingly important for investors and home buyers to invest in property close to key places of employment and business nodes, as well as key transport routes. Such properties are “probably first prize” for residential property performance as they will be highly sought after.
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