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| Benefits for Property in High-Speed Broadband |
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The advent of faster, cheaper broadband services to South Africa when it is connected to the world via the Seacom undersea cable will undoubtedly benefit the property market.
So says Gerhard Kotzé, CEO of the ERA South Africa property group, who notes that South Africans are only just beginning to grasp how far-reaching the impact of the coming communications revolution will be.
Referring to the commissioning of new undersea cables connecting South Africa to the rest of the world in time for the Soccer World Cup next year, Kotzé says there will be huge spinoffs, such as being able to provide schools across the country with less expensive access to the Internet, and significantly lowering the cost of doing business.
“In addition, the reduced cost of Internet and related communication services will benefit many households by lowering their monthly outgoings – and enable more households to have an at-home Internet connection. We expect this to give rise to a new wave of home-based businesses, and demand for properties with additional space to accommodate these enterprises.
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The current slower property market, characterised by high levels of supply and low levels of demand, offers keen opportunities for investors, but they must target the sectors that are likely to yield the best returns when the market recovers.
And, says Dr Willie Marais, national president of the Institute of Estate Agents (IEASA), several sectors deserve attention, including the student housing sector.
"This is one sector where demand is unlikely to falter. Tertiary institutions are drawing increasing student numbers while, at the same time, budgets are under increasing pressure. It is thus likely that students of the future will have to rent private accommodation near campuses since institutions are unlikely to be in a financial position to offer more on-campus housing."
Tracts of undeveloped land are other potential good buys. Marais says this holds especially true for developers who can afford holding costs on land while they wait for demand to recover.
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| South Africa Down in Global Home Price Ranking |
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South Africa now ranks 16th among 46 countries in terms of global house price performance, figures released this week by UK property group Knight Frank show.
In 2005/2006, when SA house prices were still racing ahead at 30% plus/annum, SA was rated by Knight Frank as the world's best-performing housing market. However, in first quarter 2009, SA for the first time joined the ranks of 31 other countries where house prices are now falling.
The Knight Frank Global House Price index, which uses Absa's data for SA, shows that SA house prices slipped into negative growth territory for the first time since 1986. But SA's dip of -0,3% in first quarter 2009 (y/y) is nowhere near the falls of between -16% and -36% recorded in places like the UK, US, Singapore, Dubai and Latvia over the same time.
According to Knight Frank 15 out of the 46 countries tracked in its housing index were still recording increases in first quarter 2009. Israel led the pack with prices up 10,9%, followed by the Czech Republic (9,9%), Jersey (6,9%), Switzerland (5,6%) and India (5,1%).
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| Technology Boosts Property Sales |
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Estate agents say technology is playing an increasing role in the residential property market, especially in a buyers' market with prices dropping and purchasers spoilt for choice.
This week The Tribune canvassed agents on the use of technology and all said the internet, internal listing systems, and access to Deeds Office data and municipal rating information were critical for information-hungry buyers.
Chris Tyson of Tyson Properties said his group had invested heavily in technology by designing "the finest back-end system available to agents".
Tyson Properties received more than 300 web inquiries a month.
Mike Bennett, MD of ProProp said his company had tried to install "all the gizmos, from palmtops to laptop computers" and had found the most cost-effective way of using technology was to have a good internal listing system.
"We find we get a good response from web pages for the R1 million-plus market, which probably accounts to 10% of our sales."
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| Now For The Good Property News |
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Property trend analysts are impressed that in the first week of April mortgage loans granted in the US were 77% up on the April 2008 figure.
A similar, though not quite so spectacular, rise was recorded in the UK for the same period.
Drawing attention to this very welcome turnaround in the current situation, Tony Clarke, MD of Rawson Properties, asked the question: "Does this indicate that the recovery has begun? If one accepts the old maxim that USA and the UK set the economic patterns for the world, is it possible that in South Africa the long-awaited revival is not far off?"
Clarke said that although historically it has been accepted that there is a lag period of six months before the SA economy is influenced by the US/UK market, the latest ABSA figures show that, in real terms, the declines in South African house prices have been nowhere near as drastic as those of the US and UK markets.
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| Cape Town Mixed-Use Estate Expands |
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The final phase of a commercial and residential estate in Cape Town's Tygervalley has been launched.
Development started four years ago at Bella Rosa Village on four hectares of previously unzoned land along Durban Road. Now the final stage - offices and retail space - is being offered for sale or rental.
"Both the concept of the development and the partners in the project are first rate, which has been demonstrated by the popularity of the development so far," said Sarita Edwards, sales and leasing manager of Propergation Estates.
The land on which Bella Rosa now stands was bought ten years ago. The Italian village design has drawn high-net worth corporations and individuals who now occupy the office buildings and residential apartments.
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| World Cup 2010 to 'Boost South African Growth' |
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A leading economist says a recent estimate of a 0.8% boost to South Africa's gross domestic product (GDP) thanks to the football World Cup is conservative as the impact should be higher than this.
Chief economist at Econometrix, Dr Azar Jammine, said on Thursday that South Africa is unique in the world thanks to hosting the 2010 Fifa World Cup.
He notes that German GDP improved 2% as a result of hosting the last event and their economy is eight times the size of South Africa.
"A reversal in the decline in foreign tourism is likely - the semi-finals and finals are already sold out. It is mind-boggling what that will do for our economy," says Jammine.
"I think the effect will be higher than 0.8% of GDP."
"No one else has got that and the beauty of this is that it has got our infrastructure investment going long before other countries," says Jammine.
"Our momentum of infrastructure spending is rapid," he adds, saying that other countries are only now talking about investing in this area, while SA is already implementing building.
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| SAPOA/IPD South Africa Annual Property Index |
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Results for the year to 31st December 2008
The nominal returns were sharply down on the 27.5% recorded in 2007, and the lowest in six years. This performance is nevertheless the highest in the IPD indices for all countries published to date and contrasts with the pattern seen across Europe, particularly in the UK and Ireland, where capital values plummeted last year due to yield rises across all sectors. The nominal total returns for the UK and Ireland in 2008 were -22.1%, and -34.2%, respectively.
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| Rate Cut Vital to the South African Property Sector |
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The South African Reserve Bank's monetary policy is now hopelessly conservative and a significant drop in interest rates is essential to the property sector in particular.
So says Ivan Neethling, chairman of the Western Cape branch of the Institute of South African Estate Agents (IEA), who adds that "the release of the dismal fourth quarter, 2008, GDP figures should, in many people's view, have stirred the South African Reserve Bank into action and made them realise that they cannot delay an interest rate cut any longer".
A minimum cut of 2% followed by further cuts in mid-year, said Neethling, had been expected not only by the property sector but also by many economists and the business community as a whole.
"It does appear that the cries of ordinary South Africans, the business sector and leading politicians are falling on deaf ears. Mr Mboweni, it seems, is so determined to fight off the international credit crisis by keeping interest rates high that he is prepared to let the economy shrink further.
| Institute of South African Estate Agents (IEA), 24-03-2009 |
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| Commercial Property Investments Perk Up |
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Interest rate cuts have made commercial property investments more attractive, and according to an expert, the market is now ripe for investors looking to increase their exposure.
Don't wait until the full effect of the current interest rate cutting cycle has worked its way through the economy, before investing in commercial property, advises Craig Hallowes, spokesperson for the Association of Property Unit Trusts (APUT).
The perspective is that, while South African consumers have already seen a 150 basis points cut, some financial institutions expect another 200 to 300 basis points in the pipeline before the end of 2009. Hallowes suggests that much of this anticipated decrease in interest rates is already priced into the market. He points out that the bond and forward rate agreement market tend to be more efficient than the property market when it comes to pricing because property has a growth and expectation value to it, which is a little less easy to price. However, all the markets are predicting a significant drop in interest rates.
| Association of Property Unit Trusts (APUT), 10-03-2009 |
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