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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/m² and R6 500/m² for prime sea view sites.
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| Regulator Will Ensure National Credit Act Promotes Fair Access to Credit |
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Concerns have been expressed that the National Credit Act (NCA) — which has been gradually enacted since 1 June 2006 and will come into full effect on 1 June 2007 — will hamper economic growth and housing development in unintended ways
Some housing developers fear that financial institutions will be setting unreasonably strict requirements for applicants to qualify for project finance, while others worry that the checking of the credit exposure of future borrowers required by the Act will be a protracted process that will slow down home-loan approvals, resulting in lost sales.
In response to these concerns, the National Credit Regulator (NCR), which was established by the NCA in June last year, gave the assurance that countering concerns through educating the credit applicants about their rights and the implications of the Act, investigating and solving complaints and settling disputes, were precisely what the Regulator has been tasked to do.
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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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| 2007 Residential Property Predictions |
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2006 was a watershed year in the South African residential property sector, with trends that were already discernible becoming even more evident
An increasing swing towards smaller, more compact units: "In 2006," he said, "we saw developers responding as never before to demand
from the lower middle and lower market, in the process reversing the trend towards continually higher development prices. What is more, this movement is gaining momentum: we will see more of
these multi-unit affordable projects in 2007."
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| Future of South African Property Looks Positive |
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2006 was a relatively good year for property in South Africa, and even though the appreciation figures were not as high as previous years, some areas around the country have continued to outperform the national average
Elite and sought after suburbs in both Johannesburg and Cape Town have been faring exceptionally well. For example, according to Knowledge Factory's SAPTG statistics, Llandudno has seen a yearly growth of 38,06% for the year 1 November 2005 to 31 October 2006,
while Westcliff has seen appreciation of 51,58% during the same period. This trend is expected to continue, even with all the warnings of additional interest rate hikes. Absa's latest House Price Index notes that a nominal house price growth of 12,7% year-on-year was recorded in October compared to the revised growth rate of 13,5% in September. This brought the average price of a house in the middle segment of the market to R830 700.
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| Victoria & Alfred Waterfront Gets $1bn Boost |
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The Dubai World and London & Regional Properties consortium has announced plans to invest more than US$ 1 billion in the V&A Waterfront over the next four years, following its successful purchase of the development last month
The consortium has outlined a three-stage development strategy which will see improvements to the Waterfront starting immediately.
The first stage, over the next six months, will see landscaping and beautification measures, additional car parking space, commercial facilities and improvements to pedestrian access to the area.
The second stage, over the next three years, will ensure the V&A Waterfront is one of the highlights of the World Cup 2010, with the development of new hotels and resorts, creation of promenades, and entertainment areas, marinas, new shopping developments and new apartments and offices.
The third stage will see the development of new facilities to consolidate V&A Waterfront’s status as a leading global resort, with potential elements including a new yacht club and further marina development, a cruise ship terminal, a train station and improved connections to the airport.
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| Lower-Priced Houses Still Offer Best Yields |
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The growing wealth in South Africa’s leafy suburbs is now definitely trickling down to lower-priced neighbourhoods, including townships
Evidence to support this conclusion is that lower-priced houses continued to grow faster than those in the middle- and upper-priced sectors during the third quarter of 2006, according to the latest Rode’s Report on the state of the property market. The relatively stronger performance of lower-priced houses is confirmed by the FNB Residential Property Barometer for 2006:4, which shows that during the last year, houses priced under R500.000 performed much better than their more pricey counterparts.
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| Residential Property Market Still A Strong Bet |
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If interest rates increase marginally, the market should remain firm in terms of both demand and price growth
Real estate agents are expecting the residential property market to deliver a solid performance next year. Although the heady days of late 2004 — when property price growth peaked at more than 35% year on year — will not be repeated, estate agents are upbeat about property prospects.
Seeff Properties chairman Samuel Seeff thinks the market will have another good year “across the residential market”. But Seeff says the middle market, where units are priced between R1m and R3,5m, and which is dependent on buyers obtaining bonds to finance purchases, may have less growth than the top end because of the rising interest environment.
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| Foreign Property Investment Crucial |
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The sale of the landmark V&A Waterfront to a foreign consortium is likely to act as a catalyst to further foreign investment in South Africa
2010 has made foreign investment in South Africa property a viable
long-term investment that will benefit the country.
According to Alastair Collins, chief executive of Davis Langdon & Seah International's Global Board and managing partner of the International Group that operates throughout Europe, the Middle East, Africa, Asia, Australia and
the US, nothing is more topical or pertinent to South Africa than the sustainability of
international investment in its property.
"South African property is at centre stage," he say,
"and the Star Trek tractor beam of 2010 is a big draw."
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| Property Sales Still Booming |
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Property barometer lists the best and worst performing price growth suburbs
Properties worth nearly R19bn in the price
bracket below R2,5m each were registered at the Deeds office last month.
This is the second
highest level since a peak in November 2005, when the value of properties registered was
R19,8bn.
“Activity like this shows the property market is not cooling,” said Ed Grondel, FNB’s
CEO of Homeloans.
In spite of the latest rate increase, he continued, the residential property
market has remained relatively stable.
“The rate hikes have been absorbed and have had little
impact on market activity and sentiment,” maintained Grondel. He attributed positive market
sentiment to the summer months and more realistic property prices.
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