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| Industrial Property Still Steaming Ahead |
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Strong economic growth and rising building costs and low vacancy rates ensured that the industrial property market kept up its grand performance during the last quarter of 2006
This is according to the latest issue of the authoritative Rode's Report on the South African Property Market.
Nominal rentals in all the major industrial conurbations recorded double-digit growth during the fourth quarter of 2006. What's more, rental growth was higher than building-cost inflation over the same period, meaning that rentals grew in real terms as well.
Capitalization rates - the property equivalent of the forward earnings yield of shares - showed a marginal up-tick in the final quarter of 2006; this should be viewed as a cyclical upward fluctuation around a long-term downtrend which has been in play since 2003, says Rode & Associates CEO Erwin Rode.
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| 2010 FIFA World Cup - Opportunities and Pitfalls |
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The 2010 FIFA World Cup South Africa has become the driver for infrastructural change within our country, the upgrading of Eskom, the announcement of new and upgraded airports and lots more
Leading up to 2010, the government has committed to an infrastructural investment of R410 billion and during 2010, visitors will spend over R10 billion in just 4 weeks. This event is about more than four weeks of soccer, it is also about the impact that it will have on all business sectors, pre- and post the event. No sectors will be more influenced than that of the property and construction industries.
Plenty of opportunities will arise for both sectors, which will lead to significant profits to be made – if, however, a conservative and sensible approach is taken. Consider the projected billions that will be spent on upgrading, improving and creating new infrastructures leading up to 2010 on projects such as the Gautrain and five magnificent stadiums being built in major cities around South Africa – all signs that construction is definitely experiencing a boom. Even after 2010, Coega will be fully underway, the mining industry should continue showing growth.
| Madison Property Fund Managers - Property Innovation, 20-03-2007 |
Read more |
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| It is R1billion Boom-Time in Buffalo City |
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An unprecedented building boom pushed the value of building plans passed by the Buffalo City Municipality last year to over R1billion for the first time in history
Property experts say the boom has been fuelled by new housing and shopping centre developments as well as investment flowing into the East London Industrial Development Zone.
The total value of 2006's plans was a touch over R1 billion compared to 2005's R708 million. And they predict more to come this year.
Explaining the 41 percent increase over 2005, BCM mayor Zintle Peter said the city was experiencing a period of positive growth not seen in decades.
"There are many factors responsible for the building boom, including a stable macro-economic environment and low interest rates, but I am heartened by the people of Buffalo City who are now confident to invest in the property market," she said.
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| South Africas Biggest and Most Profitable Shopping Centres |
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More than a million square metres of new shopping space is currently planned or under construction in the country and half of it is in Gauteng
The conditions driving this boom in shopping centres and making others extremely lucrative are set to continue.
According to the latest statistics from the South African Council of Shopping Centres (SACSC), 24 shopping centres with a total area of 553 000m˛ are being developed in Gauteng.
In addition, the SACSC states that South Africa currently has shopping space of 0,3m˛ per capita, compared with about 2m˛ per capita in the US, Britain and countries in Europe.
"This indicates that South Africa still has huge potential for the further expansion of shopping space," said Absa's senior economist, Jacques du Toit in the bank's latest residential property perspective.
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| Property Industry Welcomes Budget |
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Players in the property industry have welcomed Finance Minister Trevor Manuel's Good News Budget
In addition, R11 billion will be spent on social housing, while teachers' salaries are to increase by R8 billion. Both these factors will boost the property market, because teachers, as a consumer segment, are a very important house-buying segment.
This is indeed a good news budget by any standard. Government expenditure, coupled with powerful economic growth and tempered inflation will augur well for house sales and rises in house prices during 2007 and beyond.
In turn, rentals continue to rise at more than 8% per annum. This will assist investors who are currently required to subside costs of property by as much as 30%, in the form deposits, in order to break even.
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| Debts, Loans In The Property Industry |
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Property has a proven track record for being a solid investment and potential investors should not fear raising debt to acquire properties.
According to Standard Bank economist Elna Moolman, the question of whether to raise debt or not should depend upon an individual and his specific situation. "However, it is relatively comforting that interest rates are not likely to rise any further for the time being," she says. "So if an investor can afford a mortgage at these rates, there is not much risk further down the line."
Dennis Dykes, chief economist for Nedbank, agrees that a positive spin off from the latest round of interest rate hikes is that they enable investors to more realistically gauge the affordability of property. "Counter to that though is that when interest rates go up, there is less price performance in the ensuing period," he says. "This is not necessarily the case, but as affordability becomes an issue, it does tend to moderate price performance – at least in the short term."
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| Beach Properties Test New Highs |
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Property punters who put money into undeveloped coastal land in recent years have reason to feel rather chuffed with themselves
Prime land values have generally doubled over the past two to three years in many coastal cities and resort towns, whether that's in Clifton or Cape St Francis.
And most industry players expect coastal land prices to continue to outpace general house price growth over the next few years as undeveloped land with good beach access and views becomes increasingly scarce.
Estate agents say it's already hard to find a vacant beachfront stand anywhere on South Africa's coastline for less than R2m. Buyers can now expect to pay anything between R1 500/m˛ and R6 500/m˛ for prime sea view sites.
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It seems the sale of Cape Town’s Waterfront to an influential offshore consortium has reignited sentiment for the local property market
The most significant of the deals (and probably one spurred by the new ownership
developments at the V&A Waterfront) took place ‘just down the road’ with the Hospitality Group
paying R105 million for the 4-star Protea Hotel Victoria Junction.
The deal was struck at an
effective 10% discount to the R116 million value accorded to the property by independent
valuators JHI Real Estate.
It seems Hospitality Group have clinched a rather good deal with
forecast earnings from Victoria Junction penciled in at R6.8 million for the six months to end
June 2007 and R11.3 million for the full year to end June 2008.
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| Volatility Ahead in the South African Property Market |
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Catalyst continues to favour funds that exhibit high-quality and sustainable income streams, excellent disclosure and transparency and management with a proven ability to perform
Last year, listed property funds gave a total
return of 28,6% to December 31, down from 50,04% in 2005, when they were the best-performing
asset class. That's according to calculations by Catalyst Fund Managers.
Octodec, one of the
two funds managed by Alec Wapnick and his son Jeffrey in Pretoria, was the top performer (with an
income return of 9,61% and a total return of 56,66%, assuming payouts were reinvested), followed
by Des de Beer's Resilient (7,76%, 48,25%); the FM's tip for 2006, ApexHi B in the Madison
stable (9,62%, 45,58%); the Wapnicks' other fund Premium (8,29%, 45,17%); and Sanlam's Vukile
(9,91%, 41,94%).
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| Cape Town Stadium Given the Green Light |
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Plans to build a new stadium in Cape Town to stage matches in the 2010 World Cup were given the green light when the provincial government dismissed a series of appeals against its construction
Tasneem Essop, planning and economic development minister in the Western Cape provincial government, said
that a rezoning application for the land where the 68,000-seater stadium should be built had also
been approved.
"Far from having a substantial detrimental effect on the environment, overall
the new stadium and urban park on the Green Point Common will have a beneficial impact on the
local environment and will benefit the broader Cape Town community," she told reporters.
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