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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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| 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/ m²a year.
Other countries that offered similarly cheap rentals included Lithuania at € 204/m² a year and Indonesia at € 194/m².
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/m² a year.
Second on the list was Hong Kong, where office space fetched € 1745/m². 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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| How will the Electricity Crisis Affect Property? |
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Prior to the recent paralysis of the mining industry, most South Africans probably did not fully appreciate the extent of the country’s electricity problems and the implications they hold for the economy — and hence the property market
Commenting on the relationship between economic growth and electricity consumption, property economist Erwin Rode, from Rode & Associates, notes: “We built a simple statistical model using data for the past 10 years, which shows that a 1% increase in economic growth was accompanied by an increase in electricity consumption of roughly 0,8%. This shows that in a modern economy growth in economic activity is highly dependent on the availability of electricity – in case we needed any reminding.”
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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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| Sound Year Foreseen for KwaZulu-Natal Commercial Property |
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Early indications are that the KwaZulu-Natal commercial and industrial property markets have yet to peak
One positive factor underpinning the predictions was that rentals have yet to peak for industrial properties, particularly among older properties. This is despite the province, and especially Durban, its economic hub, struggling with limited stock and excess demand.
MaxProp MD Russell Scorer said there were several industrial properties in the greater Durban area where tenants were benefiting from rentals up to 30% below market indicators. This meant that when the leases were renegotiated, the rentals would jump, with investors reaping the financial benefits.
There remained “a serious shortage” of land for development in the commercial and industrial property sectors.
Scorer believed rising interest rates were not yet causing stress, translating into too few sellers of commercial property. The lack of suitable land for commercial and industrial development was pushing commercial land prices to R1500/m2 in Durban.
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| Estate Living Where to From Here? |
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John Loos, Property Strategist, FNB Commercial and Andrew Watt, Business Development Director, Lightstone, put together this report on Estate Living. The report covers the reasons for the rising popularity of complex life and considers what the future is for this type of lifestyle
Estate living is a global trend that has been particularly popular in South Africa where a variety of residential, golf, and leisure estates have been developed over the past decade. The trend shows no signs of slowing and according to Lightstone's proprietary Freehold Estates database, South Africa now has 1,435 registered Walled Estates containing 140,000 properties. These Estates primarily provide a secure lifestyle which has been particularly important in South Africa as a result of the crime situation. Other advantages include having access to high quality recreational facilities, increasing the sense of community (which is limited by the high walls outside Estates) and having more control over community expenditure and development.
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| Property Outlook for 2008 |
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Although the property market is currently experiencing a downturn, the forecast for next year is positive, according to industry leaders, with strong growth predicted in the lower end of the market as well as the commercial and retail property classes and a recovery expected by 2009
"At double-digit house price inflation, it's still a pretty good situation for a downturn, and 2008 is expected to bring the turning point."
So says John Loos, property strategist at FNB, who released his outlook for the market in 2008 this week, in which he evaluated the underlying strength of the market during the current downturn.
In his report Loos states that when the downturn began the prospect of a market collapse similar to the mid-1980s (where house price deflation plunged to -9% around mid-1985) may have loomed large in some minds, following a boom significantly greater than that of 2 decades ago.
However, he notes that although on a declining trend, we are still experiencing real house price inflation above 12% (i.e. double-digit nominal house price inflation exceeding consumer price inflation by a significant margin), and theorizes that the possibility exists that we may be approaching the bottom of the cycle.
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