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| Building Activity Shows Decline, Stats South Africa Shows |
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The figures show that while total building plans passed increased in January, the residential sector is still under pressure and will remain so during 2008 due to high interest rates
They also show that planning for future projects was beginning to decline in general because of economic factors even before the cutback in projects being caused by the Eskom crisis is factored into the equation.
Stats SA says growth in total building plans passed increased in January by 18,6% year-on-year (y/y) to record the highest growth since March 2006 of 21% y/y following two consecutive declines in both November and December of -18,7% y/y and -13,3% y/y respectively.
The recovery in growth in total building plans passed in January was led by an increase in two categories.
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| Call for Green Property Incentives |
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The real estate industry has joined the call for comprehensive Government incentives for energy efficient retrofits of residential properties
CEO of ERA South Africa property group Gerhard Kotzé says the first laudable steps in this direction have been taken with reports that Government is planning subsidies for solar powered geysers and the news that Eskom is planning a door-to-door giveaway campaign of energy efficient light bulbs to replace less efficient incandescent light bulbs.
“However what’s needed is a more widely embracing package with everything from hybrid geysers (a mix of electrical and solar) to stand-by batteries and generators, use of natural lighting, solar walls to provide solar heating throughout the home, roof insulation, heat recovery ventilation and other energy saving measures.
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| Residential Property Impressive by World Standards |
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South Africa property among world’s best performing Global House Price Index
South African estate agents may be feeling the pain of tougher market conditions, but from an international perspective returns from the residential asset class look “impressive” on the surface.
That’s the message contained in a report produced by Knight Frank to accompany its Knight Frank Global House Price Index for 2007.
The index, which is an average snapshot of international residential property performance, fell in the final quarter on a year-on-year basis, but for the year price inflation was just over 8%.
| Knight Frank Global House Price Index, 18-03-2008 |
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| 2010 Spurs Interest in Cape Town Property |
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It is beginning to be clear that some of the very optimistic predictions about the 2010 Soccer World Cup event are not unfounded
We have already begun to see an influx of business travellers - particularly film and television people - coming to Cape Town to prepare for the event and they are often looking for short or long-term rentals to cover the period of the event and the run-up to it," says Lanice Steward, managing director of Anne Porter Knight Frank (APKF), an estate agency that serves the southern suburbs of Cape Town and much of the Cape Peninsula's Atlantic Seaboard.
"We have also noticed a big rise in the number of people now seriously interested in buying rentable homes, bed and breakfasts and small hotels."
Steward said that the Sea Point/Green Point area, close to the fast rising new stadium, is the preferred precinct for most of the new enquirers.
| Anne Porter Knight Frank, 16-03-2008 |
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Although survey results from the last quarter of 2007 do not yet show it, capitalization rates for non-residential properties are more than likely under pressure at the moment, says Erwin Rode of property economists and valuers Rode & Associates
“With an increasingly uncertain inflation outlook, the prime overdraft rate seems set to remain elevated for some time still. And with capitalization rates of prime-quality properties as low as 8-9%, and investor demand becoming more precarious, a narrowing of the gap between interest and cap rates seems almost certain. Notwithstanding this, we do not expect a major weakening (increase) in capitalization rates, as the expectation of robust rental growth is still supporting property’s rating,” says Rode.
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| New Estate has Alternative Power |
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A property development that launched last week in Boskruin on Johannesburg's West Rand has taken pro-active steps to minimise the inconvenience and danger faced by South Africa's home owners due to power outages
Solar panels and a generator have been included on the optional extras list, whilst gas appliances were installed to keep food cooking even if Eskom's power supply shuts off. The danger of opportunistic criminal activity within complex by maintenance personnel has also been minimised by use of low-maintenance finishes.
Fulvio De Stefanis, Director of DVG Construction, explains that due to the recent black outs and sustained criminal activities experienced by home owners across Gauteng, "it was imperative for us to offer an appropriate package for the environment in which we live."
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| Housing Review 1st Quarter 2008 |
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Property Trends - Housing Review
The South African economy expanded by 5,1% in real terms in 2007,
mainly as a result of strong growth in the financial, real estate and
business services sector.
During the course of 2007 the household sector was affected by rising
inflation, higher interest rates and the implementation of the National
Credit Act (NCA). The cost of servicing household debt increased to
above 10% of disposable income, real disposable income growth
slowed towards the end of the year, and real consumption expenditure
growth tapered off to lower levels.
Nominal and real house price growth slowed down further towards the
end of 2007, largely as a result of the tightening of monetary policy
since mid-2006, stricter requirements for credit extension implemented
in the second half of last year, and housing having become less
affordable, putting pressure on household finances.
| Absa Group Economic Research, 29-02-2008 |
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| South Africa Offices a Landlords Market |
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South Africa is the fifth-cheapest office destination in the world, which means that office property rentals are likely to continue rising
According to the latest global report, Office Space Across the World, by real estate services group Cushman & Wakefield, SA was ranked 54th out of 58 countries when it came to the most expensive office locations.
Prime office space in Johannesburg’s Sandton central business district fetches rentals of € 207/ m˛a year.
Other countries that offered similarly cheap rentals included Lithuania at € 204/m˛ a year and Indonesia at € 194/m˛.
David Green, MD of Pace Property Group, the associate office for Cushman & Wakefield in SA, said London again achieved top spot as the most expensive office destination with the West End fetching rentals of € 2277/m˛ a year.
Second on the list was Hong Kong, where office space fetched € 1745/m˛. Tokyo, Mumbai, Moscow and Paris were placed third to sixth.
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| New Focus on Green Building |
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The electricity supply crisis is giving developers an incentive to adopt “green building” principles in their new property developments
The newly established Green Building Council of SA says it believes that the electricity supply crisis is probably the “biggest promotion for green building that we can get”.
The City of Johannesburg also announced this week that it was introducing new requirements to ensure greater energy efficiency in new developments.
Philip Harrison, executive director: development planning and urban management, said new developments would need to include alternative energy sources or energy-saving devices. Building plans would be evaluated in terms of these measures.
Europe has in the past embraced “green building” concepts far more readily than SA because of high base energy costs.
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| Property Prices to Increase by 60 Percent in Next 5 Years |
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However, the strong growth of the economy and low interest rates also made it easier for prospective buyers to own their own property, which put the buy-to-let-market under pressure against the background of a surge in supply of rental properties coming onto the market
This caused rental yields to dip to as low as 0,5% in recent times," says Gavin Opperman, Managing Executive of Absa Home Loans.
Opperman says the rental market is, however, starting to pick up in view of rising interest rates, uncertainty of where rates might peak, and the National Credit Act (NCA). These developments impact on buyers' ability to qualify for a mortgage loan to buy property, while prices are still increasing, although at a much slower pace.
"The rental market is expected to pick up further taking into account the current conditions, as well as the possible negative impact the electricity crisis may have on economic growth, employment, household income and consumption. These developments may force many households to rent."
| Absa Group Economic Research, 12-02-2008 |
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