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| Listed Property Shines in South Africa’s Top Ranking Companies |
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This as calculated by I-Net Bridge and being pitched against companies which are foreign-based, with a secondary listing on the JSE, such as SABMiller, Anglo American, BHP Billiton and Old Mutual. The results were recently published in the Top 100 Companies survey carried out by the Business Times.
Property Loan Stock Association of SA (PLSA) has welcomed the news. Brian Azizollahoff, who heads up the Property Loan Stock Association (PLSA) marketing committee and is CEO of Redefine Income Fund commented: “The Top 100 survey results are a testament to the excellent performance of listed property, particularly during the last year which has presented the industry with its fair share of challenges.” He added that listed property continues to make a positive impression on the South African investment landscape and that the results of the survey are encouraging at a time when sentiment has been uncertain. “Investors can be assured that the fundamentals in listed property are still strong,” he said.
The survey acknowledges those companies that have delivered the most wealth for their shareholders. The rankings are determined as follows: the share price performance of every company listed on the JSE is measured on the basis of R10,000 invested over five years (from October 2003 to September 2008). Companies are then ranked according to their share price growth.
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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%.
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| Coastal Land Values Still Firm |
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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.
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| Property Ownership’s Big Leap |
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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 |
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| What is a Prime Location? |
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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.
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| Obama Election Holds Promise for South Africa |
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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.
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| Johannesburg Gives R790m for 2010 |
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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.
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| Caution on Negative Property Equity |
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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.
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| South African Homeowners not in Storm Alone |
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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.
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| Value of Building Plans Passed Down |
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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 |
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