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Market Updates


		We have made a selection of interesting articles and research documents about the South African property market.

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Market Updates

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Property Still Strong

Growth in flat rentals, in areas such as Johannesburg, Pretoria and Cape Town, has for the past three years remained roughly in line with consumer price inflation (+9% p.a.) while in Durban (+12% p.a.) and Port Elizabeth (+11% p.a.) rentals even managed to marginally outperform inflation.

According to the latest Rode’s Report, Durban continued to perform on the industrial front, and is the only city whose rentals (+21%) outperformed the growth in building-cost inflation (+12%). Growth in rentals in the other major industrial centres has cooled somewhat, with the Central Witwatersrand, the Cape Peninsula and Port Elizabeth showing rental growth of 12%, 10% and 9% respectively. The building industry is experiencing its own slow-down in the form of ‘stagflation’ in that building-input-cost inflation in recent quarters has been accelerating while building-contract inflation has been decelerating. According to Erwin Rode of Rode & Associates: ‘In the third quarter of 2008, for example, building-input-cost inflation (according to the Haylett index) is expected to have grown by about 16%, while building-contract-cost inflation (according to the BER Building Cost Index) is expected to have recorded growth of roughly 12%.

Rode & Associates, 10-12-2008

Coastal Land Values Still Firm

Undeveloped land in popular coastal areas appears to be the one sector of the residential property market that is still experiencing double-digit price growth.

Latest figures from Absa show that prices of vacant stands along South Africa's coastline were still rising at 16,1% in third quarter 2008 year-on-year. That brought the price of the average coastal plot to R607,400. The 16,1% growth in coastal land values in the third quarter compares to average house price growth of only 2,1%, as measured by Absa over the same time. Estate agents confirm that beach front and sea view plots continue to set new price records, as the scarcity value of well-located land continues to place upward pressure on prices. For instance, a plot in Clifton was recently sold for a whopping R16,5m to a Gauteng businessman. That is believed to be the highest price ever achieved for an undeveloped stand in SA. The previous record for a vacant plot was set in early 2007 when a stand in Clifton's prestigious Nettleton Road was sold for R13,5m.

estata, 08-12-2008

Property Ownership’s Big Leap

Rising number of black entrepreneurs entering market, establishing sustainable estate agencies.

Strong growth in the black property market, with black first-time home buyers fast catching white first-time property owners in terms of volumes, points to a rising number of black entrepreneurs entering the property market and establishing sustainable, black-owned and staffed estate agencies, says Leapfrog Property Group executive director Kura Chihota. A case in point is the recent opening of the black-owned and staffed Rondebosch East and Khayelitsha Leapfrog agencies, which notched up sales in the region of R3m in their first two months of operation. “If anyone takes a long-term view and is looking for growth, surely the growing and increasingly affluent black middle class has to be the driver of most future real estate sales?,” Chihota asks.

Leapfrog Property Group, 03-12-2008

What is a Prime Location?

Anyone in the property industry will tell you the key to property investment is location, location, location.

This is generally interpreted as the property being in a "prime" location for it to be highly rated. Which begs the question – how does one define "prime" location? Is Sandton prime? Most people would argue it is. Why? It is an upmarket area in the heart of Johannesburg's central business district. Therefore, a good area to invest in. Is Germiston prime? Situated in Gauteng's East Rand, nowhere near the financial capital of South Africa, serving a predominantly lower and middle class market, Germiston is hardly a "prime" destination. Yet it is here that ApexHi's flagship shopping centre, Golden Walk, is located. Attracting almost one million shoppers per month, this 36,000m2 fully let retail centre is currently undergoing a significant R110,5m refurbishment to accommodate the demand for more space in the centre - a demand created by retailers and shoppers alike, which has resulted in increased rentals being achieved when leases expire and are renewed.

ApexHi Properties, 01-12-2008

Obama Election Holds Promise for South Africa

The runaway election of Barack Obama as President of the USA could be good news for the South African economy and South African property investors.

"Those of us who have watched this election campaign have been encouraged by a whole number of factors," said Greeff. "Firstly, Obama appears to understand more clearly than his predecessors the causes of the USA's economic woes and he gives the impression of having worked out the drastic reform measures needed to put matters right. That in turn means that by 2010 - if not sooner - the USA economy should be into a full-scale recovery based on far sounder save first - spend later principles. "Secondly, Obama is very definitely more aware of Africa and of the Third World's predicament than any previous president. This, I believe, will result in greater global awareness, particularly of poverty, AIDS and the dangers of insurrection throughout Africa and will lead to increased involvement by all First World countries in this area once the present global economic problems are behind us.

Greeff Properties, 12-11-2008

Johannesburg Gives R790m for 2010

The executive mayor of Johannesburg, Amos Masondo, announced on Wednesday that R789,1m has been budgeted for by the city for the 2010 FIFA World Cup.

Of that amount, R580m will go towards the completion of South Africa's flagship stadium, Soccer City, a further R130m will be used to complete the upgrades at Ellis Park and R82m for one of the city's primary legacy projects. Delivering the city's 2006 to 2008 Mid-Term Report on Wednesday, Masondo said further to this, Johannesburg would contribute R120m toward the construction and outfitting of the International Broadcasting Centre (IBC). The state-of-the-art IBC, to be located in Johannesburg not far from the Soccer City Stadium, will be used by the world's media during the World Cup and contribute significantly to ongoing improvements in local telecommunication and broadcasting infrastructure.

City of Johannesburg, 30-10-2008

Caution on Negative Property Equity

The South African Reserve Bank (SARB) cautioned on Thursday in its latest Financial Stability Review that a possible impact on financial stability of the weaker property market could be felt through negative equity.

This would occur as some sellers are selling their properties at prices equal to or below their earlier purchase prices. "Since properties are usually used as collateral when acquiring credit from financial institutions, negative equity erodes the value of that collateral and therefore, if widespread, can be detrimental to the stability of the financial system," explained the SARB. It noted that confirmation of slowing residential property market activity came from the fact that the market continues to be a buyers' market. The SARB said that the number of properties sold below asking price increased to 85% in the second quarter of 2008 (from 82% in the previous quarter) and 82% of properties remained in the market for three months or longer.

I-Net Bridge, 24-10-2008

South African Homeowners not in Storm Alone

Hard-pressed South African homeowners at least have the consolation of knowing that they are not alone in battling with a poor property market and that inevitably conditions will improve.

That's the view of Mark Friend, vice president of Realogy Holdings, the holding company for a number of leading real estate organisations including ERA. On a recent visit to South Africa to meet with agents and management of the ERA South Africa group, one of the most successful of the Realogy associate companies, Friend said tough local conditions mirrored the rest of the property world. His areas of responsibility include Australia, Africa and Asia. His perspective on the markets of these regions is therefore based upon first-hand experience. "The drivers in these respective markets are uncannily similar, driven mainly by poor business conditions, credit restrictions, high interest rates, mounting inflation and declining consumer disposable income.

Realogy Holdings, 20-10-2008

Value of Building Plans Passed Down

The value of recorded building plans passed by larger municipalities at current prices during January to August 2008 decreased by 3,6% (-R1,997m) compared with January to August 2007.

Decreases were reported for residential buildings (-11,4% or -R3,467,800) and additions and alterations (-0,8% or -R114,4m). These decreases were partially counteracted by an increase reported for non-residential buildings (15.1% or R1 585,2m). Six provinces reported decreases in the value of building plans passed. The biggest contributor to the decrease of 3,6% was Gauteng (contributing -3,6 percentage points or -R1,997,600), followed by Western Cape (-1,8 percentage points or -R992,4m) and Eastern Cape (-1,8 percentage points or -R975,6m). However, KwaZulu-Natal counteracted these decreases to a certain extent, increasing by 4,4 percentage points (R2,439m). The real value of recorded building plans passed by larger municipalities (at constant 2000 prices) during January to August 2008 decreased by 14,9% (-R4,800,800) compared with January to August 2007.

Statistics South Africa, 17-10-2008

What are your offshore options?

Many South African property investors are now looking overseas to diversify their property portfolios while others are looking for emigration options.

Mariana Tolken, managing director of offshore property investment specialists, Gas Properties, provides an overview of five international property investment destinations. Busy and bustling, wealth is largely on display in the vibrant city of New York. Not in the form of big expensive cars (only 20% of New Yorkers have such), top villas or over-the-top jewelled older ladies. The wealth here is wealth of generations of investment tradition and the wealth of financial planning and preservation. For such people, the difficult financial situation in America of the moment is holding up and they are actually benefiting from this chaotic credit time. Different destinations offer very different opportunities for property investment. And it is really important to know what it is you want from an offshore property investment.

Gas Properties, 01-10-2008

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Thabazimbi, Waterberg, Limpopo
ZAR Price on Application

Napier, Garden Route, Western Cape
ZAR 3,900,000

Breede River, Garden Route, Western Cape
ZAR Price on Application

Stellenbosch, Winelands, Western Cape
ZAR 1,879,500

Port Elizabeth, Addo, Eastern Cape
ZAR Price on Application

St Helena Bay, West Coast, Western Cape
ZAR 495,000

Langebaan, West Coast, Western Cape
ZAR 1,295,000

Port Elizabeth, Sunshine Coast, Eastern Cape
ZAR 1,563,000

Welkom, Sandriver, Free State
ZAR 200,000

Plattekloof, Cape Town, Western Cape
ZAR 640,000

Cerf Island, Seychelles
ZAR Price on Application

Kleinmond, Overberg, Western Cape
ZAR Price on Application

Vanwyksdorp, Klein Karoo, Western Cape
ZAR Price on Application

Melkbosstrand, Cape Town, Western Cape
ZAR Price on Application

Hillcrest, Durban, KwaZulu-Natal
ZAR 1,150,000

Durbanville, Cape Town, Western Cape
ZAR 1,195,000

Hout Bay, Cape Town, Western Cape
ZAR 995,000

Great Brak River, Garden Route, Western Cape
ZAR 559,000

Gauteng
ZAR 1,295,000

Manama, Bahrain
ZAR Price on Application

Wellington, Boland, Western Cape
ZAR 990,000

Glengariff, Sunshine Coast, Eastern Cape
ZAR 425,000

Plattekloof, Cape Town, Western Cape
ZAR 1,000,000

Pretoria, Gauteng
ZAR 473,250

Tyger Valley, Cape Town, Western Cape
ZAR 499,000

Hermanus, Overberg, Western Cape
ZAR 2,000,000

Thabazimbi, Waterberg Biosphere, Limpopo
ZAR 390,000

Knysna, Garden Route, Western Cape
ZAR 750,000

Blaauwbergstrand, West Coast, Western Cape
ZAR 100,000

Waterval Boven, Mpumalanga Escarpment, Mpumalanga
ZAR 20,000,000

Makhado, Soutpansberg, Limpopo
ZAR Price on Application

Blyderus, Blyde River, Limpopo
ZAR 1,600,000

Bloubergstrand, Cape Town, Western Cape
ZAR 1,250,000

Wellington, Winelands, Western Cape
ZAR 785,000

Balgowan, Midlands, KwaZulu-Natal
ZAR Price on Application

Groot Drakenstein, Winelands, Western Cape
ZAR 12,000,000

Bela-Bela, Waterberg, Limpopo
ZAR Price on Application

Ballito, North Coast, KwaZulu-Natal
ZAR 695,000

Durban, KwaZulu-Natal
ZAR Price on Application

Wigwam, Rustenburg, North West
ZAR 660,000

Britannia Bay, West Coast, Western Cape
ZAR Price on Application

Lydenburg, Sekhukhuneland, Mpumalanga
ZAR 450,000

Alicedale, Karoo, Eastern Cape
ZAR Price on Application

Jeffreys Bay, Eastern Cape
ZAR 13,500,000

Port Elizabeth, Cacadu District, Eastern Cape
ZAR Price on Application

Noordhoek, Cape Town, Western Cape
ZAR 6,000,000

Green Point, Cape Town, Western Cape
ZAR 3,000,000

Underberg, Drakensberg, KwaZulu-Natal
ZAR 1,850,000

Drakensberg, KwaZulu-Natal
ZAR 640,000

Hillcrest, Durban, KwaZulu-Natal
ZAR 1,269,000

Sandy Bank Bay, St. Kitts, Caribbean
ZAR Price on Application

Constantia, Southern Suburbs, Western Cape
ZAR 850,000

Clapham, London, United Kingdom
GBP 275,000

Boksburg, Johannesburg, Gauteng
ZAR Price on Application

Wakkerstroom, Drakensberg, KwaZulu-Natal
ZAR 545,000

Port Elizabeth, Garden Route, Eastern Cape
ZAR Price on Application

Somerset West, Helderberg, Western Cape
ZAR 2,300,000

Kidds Beach, Sunshine Coast, Eastern Cape
ZAR 720,000

Country Guest Lodge in Beautiful Breede River Valley

Villiersdorp, Boland, Western Cape
ZAR 5,900,000

Winelands, Western Cape
ZAR 750,000

Gordon's Bay, Cape Town, Western Cape
ZAR 599,000

Dullstroom, Steenkampsberg, Mpumalanga
ZAR 7,400,000

Jacobsbaai, West Coast, Western Cape
ZAR 495,000

Potchefstroom, North West
ZAR 390,000

Stellenbosch, Winelands, Western Cape
ZAR Price on Application

Kavango Zambezi Transfrontier Conservation Area, Botswana
ZAR Price on Application

Lephalale, Limpopo
ZAR Price on Application

Development Project on Prime Beachfront Location

Hout Bay, Cape Town, Western Cape
ZAR Price on Application

Wellington, Winelands, Western Cape
ZAR 500,000

Melkbosstrand, West Coast, Western Cape
ZAR 3,900,000

Amanzimtoti, Durban, KwaZulu-Natal
ZAR Price on Application

George, Garden Route, Western Cape
ZAR Price on Application

East London, Eastern Cape
ZAR Price on Application

Benoni, Johannesburg, Gauteng
ZAR 620,000

Bela-Bela, Waterberg, Limpopo
ZAR 535,000

Kruger National Park, Mpumalanga
ZAR 1,300,000

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