Economists Disagree
According to a recent article published by Business Report, economists seem to have divergent views when it comes to the property market outlook. This came to light at a fractional ownership conference in Cape Town yesterday.
Property strategist at FNB’s home loans department, John Loos forecast an improvement in sentiment, saying that now is “probably as good as it gets” in terms of the best time to buy property before prices start to recover.
Erwin Rode, of property research company Rode & Associates, had a much more pessimistic view, saying that “a long period of stagnation lies ahead” and this could last as long as five years. “That means prices of houses will lag inflation. That is, if building costs go up by 8 percent, house prices will rise by 4 percent in nominal terms,” he said.
According to Rode, this is the result of people in developed countries having lived beyond their means and surviving for many years on borrowed money. Fractional ownership is governed by the same regulations as timeshare and although there are several different models, the main difference is that it is confined essentially to the very upmarket property. Rode hoped that this would continue to be the case and that banks would stay out of financing it.
Dirk Wilson, co-founder of fractionalownership.co.za and the conference organizer, said that fractional ownership differed from timeshare in that the investors gained a share of equity in the property and not just the right to occupy the premises or let it for a certain period. Fractional sales are said to be “doing quite well” considering the state of the property market, but more participants are needed in providing properties, which have dropped from 64 six months ago to just 34 companies at present.
There has been a great deal of interest in South Africa from overseas investors and buyers looking for properties available now and not in the planning stage, such as golf estates or near the beach. There have to be hospitality and leisure facilities of a high standard, such as room service and a spa. Fractional ownership is really an investment in lifestyle and thus comes with a certain standard of living.
According to Wilson, 74 percent of enquiries about fractional title investment properties in South Africa were from overseas, including the UK, the US, Australia and the UAE. Also, a large number of South African expatriates are interested in property investment here, but “not a whole house,” as he said.
The information in this article is courtesy of Audrey d’Angelo (“Economists give widely differing views on property”, Business Report, 22 August 2008).
Find property in the Overberg region of the Western Cape.
Tuesday, August 26, 2008
Wednesday, August 13, 2008
Proposed Land Bill Criticised by Civil Society
Land Bill Has Wide Implications
An article published by Realestateweb has drawn attention to the government’s proposed Land Bill and the possibility that it could be about more than just real estate, potentially allowing the government to take everything you own, including your intellectual property.
This message about the proposed land expropriation bill soon to come before parliament came from a group of well-respected economic and constitutional thinkers at a conference on the implications of the Land Bill held in Cape Town on Monday.
The conference delegates discussed how the Bill has ominous implications for the country’s economy, as well as South African society. The Bill’s main problem when it comes to property ownership is that it gives the state the right to take your house and land without paying a market-related price for it. In other words, it becomes a “take now, fight about the details later” approach.
South African farmers raised the alarm about the Bill initially, as much of the focus is on agricultural land in a bid to speed up the land redistribution program. Those in the know predict that food security and a loss of investor confidence, similar to what has happened in nearby Zimbabwe, can be expected if the new law is enacted.
Dave Steward, executive director of the FW de Klerk Foundation that played host to the conference, highlighted a “particularly nasty clause”, which gives the Minister the right to appropriate any property. This obviously has much wider implications than those specifically related to land reform.
“It could be shares. It could be on behalf of any juristic person…this could be a company where they have tried to negotiate and failed,” said Steward, indicating that this “looks like a massive expansion of BEE (Black Economic Empowerment)”. Steward goes on to say that, “It is horrifying in its implications,” and that there could be a BEE company, which could simply ask the Minister to expropriate shares.
Dr Leon Louw of the Free Market Foundation said that the Bill “is about all forms of property, including intellectual property,” and cited examples of software copyright, school text book copyright, pharmaceutical company rights over medicines and shares, as being among the types of property that might be expropriated in terms of the proposed law.
Former head of the Afrikaanse Handelsinstituut and chief economist at Transnet, Ulrich Joubert warned that the South African economy is particularly vulnerable to the loss of capital and skills. The economic growth in the 1990s and 2000s was spurred on to a large extent by consumer spending. Foreign investment is largely based on portfolios and this means easy withdrawal from South Africa.
Joubert asserted that South Africa needs to avoid adding to the risk perceptions already making investors nervous by threatening property rights entrenched in the constitution. “We need to create an environment where investors can be confident of getting a return on investment – without being expropriated,” he urged.
Schlemmer, a constitutional expert, believes that it takes a long time for events surrounding legislature to “penetrate through to the population”. At the moment, only a small number of South Africans are actually aware of the looming threat and its implications. Considering the already growing negative sentiment, he suggests that now would be a “very bad time to start messing with land ownership and property”.
He went on to say that the government appears to be disguising the lack of capacity of government departments and the lack of delivery around the land question with this new legislation. Compared to the government’s housing challenge, the land issue is a relatively “small problem”, Schlemmer said in reference to a provision in the Bill for the expropriation of real estate in towns and cities.
A number of political leaders also attended the conference, including Democratic Alliance leader Helen Zille. She referred to the legislation as a “wedge issue”, which the ANC “uses before elections to mobilize people on the basis of race to vote for the ANC”. Zille went on to say that, “There are people in the ANC who are as appalled. What we are seeing around expropriation is symptomatic of what we will be seeing in the years ahead. What we are seeing is a government claiming to represent the will of the majority – it is not in the interests of the majority…it isn’t the will of the majority. We have a venal minority posing as a righteous majority – using the race card”.
The ANC did not attend the conference and when asked for an explanation, Steward said, “We invited people from their portfolio committee and relevant government departments. I guess they are all busy on a Monday afternoon.”
The Bill was meant to go in front of the National Assembly this week, but the “fact they decided to postpone it might be a positive indication,” said Steward.
The information in this article is courtesy of Jackie Cameron (“Mind losing your house, business, shares and book royalties?”, Realestateweb, 4 August 2008).
Visit www.realty1capeagulhas.com if you would like to buy or sell property in the Overberg region of the Western Cape.
An article published by Realestateweb has drawn attention to the government’s proposed Land Bill and the possibility that it could be about more than just real estate, potentially allowing the government to take everything you own, including your intellectual property.
This message about the proposed land expropriation bill soon to come before parliament came from a group of well-respected economic and constitutional thinkers at a conference on the implications of the Land Bill held in Cape Town on Monday.
The conference delegates discussed how the Bill has ominous implications for the country’s economy, as well as South African society. The Bill’s main problem when it comes to property ownership is that it gives the state the right to take your house and land without paying a market-related price for it. In other words, it becomes a “take now, fight about the details later” approach.
South African farmers raised the alarm about the Bill initially, as much of the focus is on agricultural land in a bid to speed up the land redistribution program. Those in the know predict that food security and a loss of investor confidence, similar to what has happened in nearby Zimbabwe, can be expected if the new law is enacted.
Dave Steward, executive director of the FW de Klerk Foundation that played host to the conference, highlighted a “particularly nasty clause”, which gives the Minister the right to appropriate any property. This obviously has much wider implications than those specifically related to land reform.
“It could be shares. It could be on behalf of any juristic person…this could be a company where they have tried to negotiate and failed,” said Steward, indicating that this “looks like a massive expansion of BEE (Black Economic Empowerment)”. Steward goes on to say that, “It is horrifying in its implications,” and that there could be a BEE company, which could simply ask the Minister to expropriate shares.
Dr Leon Louw of the Free Market Foundation said that the Bill “is about all forms of property, including intellectual property,” and cited examples of software copyright, school text book copyright, pharmaceutical company rights over medicines and shares, as being among the types of property that might be expropriated in terms of the proposed law.
Former head of the Afrikaanse Handelsinstituut and chief economist at Transnet, Ulrich Joubert warned that the South African economy is particularly vulnerable to the loss of capital and skills. The economic growth in the 1990s and 2000s was spurred on to a large extent by consumer spending. Foreign investment is largely based on portfolios and this means easy withdrawal from South Africa.
Joubert asserted that South Africa needs to avoid adding to the risk perceptions already making investors nervous by threatening property rights entrenched in the constitution. “We need to create an environment where investors can be confident of getting a return on investment – without being expropriated,” he urged.
Schlemmer, a constitutional expert, believes that it takes a long time for events surrounding legislature to “penetrate through to the population”. At the moment, only a small number of South Africans are actually aware of the looming threat and its implications. Considering the already growing negative sentiment, he suggests that now would be a “very bad time to start messing with land ownership and property”.
He went on to say that the government appears to be disguising the lack of capacity of government departments and the lack of delivery around the land question with this new legislation. Compared to the government’s housing challenge, the land issue is a relatively “small problem”, Schlemmer said in reference to a provision in the Bill for the expropriation of real estate in towns and cities.
A number of political leaders also attended the conference, including Democratic Alliance leader Helen Zille. She referred to the legislation as a “wedge issue”, which the ANC “uses before elections to mobilize people on the basis of race to vote for the ANC”. Zille went on to say that, “There are people in the ANC who are as appalled. What we are seeing around expropriation is symptomatic of what we will be seeing in the years ahead. What we are seeing is a government claiming to represent the will of the majority – it is not in the interests of the majority…it isn’t the will of the majority. We have a venal minority posing as a righteous majority – using the race card”.
The ANC did not attend the conference and when asked for an explanation, Steward said, “We invited people from their portfolio committee and relevant government departments. I guess they are all busy on a Monday afternoon.”
The Bill was meant to go in front of the National Assembly this week, but the “fact they decided to postpone it might be a positive indication,” said Steward.
The information in this article is courtesy of Jackie Cameron (“Mind losing your house, business, shares and book royalties?”, Realestateweb, 4 August 2008).
Visit www.realty1capeagulhas.com if you would like to buy or sell property in the Overberg region of the Western Cape.
Thursday, August 7, 2008
Building Practice in SA Going Green
SA to Adopt Green Star Rating Tool
An Engineering News article draws attention to the expected launch of South Africa’s green building rating tool in Cape Town in November. The Green Star rating tool will be launched at the inaugural Green Building Council of South Africa (GBCSA) convention and exhibition.
The rating tool applies to green building in offices and will be followed by specific tools that apply to retail, multi-unit residential and other building types, in order of market demand. Part of the GBCSA’s mandate is the running of its first Green Star SA Accredited Professional Course on November 5 this year, which is after the close of the main convention.
Established in 2007, the GBCSA recently launched for general membership and is an emerging member of the World Green Building Council. The council’s mission is the promotion of green building practice, to act as a resource centre for the industry, the development and operation of the green building rating system and the provision of training and education to ensure developers and investors are quickly brought up to speed on the various practices, this according to Bruce Kerswill, chairperson for the GBCSA.
The Green Star rating tools have been adapted from the rating system in Australia and similar tools have marked the mainstream adoption of green building in a number of markets overseas, which would be a crucial step in the GBCSA’s mission in South Africa, the council indicated.
The accreditation of new and refurbished developments in line with green building practices is a challenge that has already been taken up by property developers and investors around the globe, which is due largely to the demand from tenants for more productive spaces.
According to Kerswill, “The challenge to the South African commercial and industrial development industry is to see how quickly and effectively they are able to embrace the need for green accreditation”. The council noted that, “Detailed, practical guidance on green building techniques will also be showcased as a key element of the convention, using both local and international case studies”.
There are a number of international speakers lined up for the convention, including Che Wall, past chairperson of the World Green Building Council and managing director of Lincolne Scott, a building services consultancy practicing in Australia and Asia Pacific; Richard Fedrizzi, president, CEO and founding chairperson of the US Green Building Council; as well as Andrew Borger, managing director of Leighton Properties, who will have key members of his consulting team to present a case study on the 5 Star Green Star project in Queensland.
Speakers specializing locally include Indresen Pillay, managing director of Davis Langdon SA and a member of the same company’s global international Sustainability Group, who is scheduled to discuss the costs involved with green building. The GBCSA will also present a range of green building technologies, products and services, alongside the convention.
The information in this article is courtesy of Christy van der Merwe (“Green building rating tool to be launched in November”, Engineering News, 5 August 2008).
If you would like to buy or sell property in South Africa's Overberg region, please visit www.realty1capeagulhas.com.
An Engineering News article draws attention to the expected launch of South Africa’s green building rating tool in Cape Town in November. The Green Star rating tool will be launched at the inaugural Green Building Council of South Africa (GBCSA) convention and exhibition.
The rating tool applies to green building in offices and will be followed by specific tools that apply to retail, multi-unit residential and other building types, in order of market demand. Part of the GBCSA’s mandate is the running of its first Green Star SA Accredited Professional Course on November 5 this year, which is after the close of the main convention.
Established in 2007, the GBCSA recently launched for general membership and is an emerging member of the World Green Building Council. The council’s mission is the promotion of green building practice, to act as a resource centre for the industry, the development and operation of the green building rating system and the provision of training and education to ensure developers and investors are quickly brought up to speed on the various practices, this according to Bruce Kerswill, chairperson for the GBCSA.
The Green Star rating tools have been adapted from the rating system in Australia and similar tools have marked the mainstream adoption of green building in a number of markets overseas, which would be a crucial step in the GBCSA’s mission in South Africa, the council indicated.
The accreditation of new and refurbished developments in line with green building practices is a challenge that has already been taken up by property developers and investors around the globe, which is due largely to the demand from tenants for more productive spaces.
According to Kerswill, “The challenge to the South African commercial and industrial development industry is to see how quickly and effectively they are able to embrace the need for green accreditation”. The council noted that, “Detailed, practical guidance on green building techniques will also be showcased as a key element of the convention, using both local and international case studies”.
There are a number of international speakers lined up for the convention, including Che Wall, past chairperson of the World Green Building Council and managing director of Lincolne Scott, a building services consultancy practicing in Australia and Asia Pacific; Richard Fedrizzi, president, CEO and founding chairperson of the US Green Building Council; as well as Andrew Borger, managing director of Leighton Properties, who will have key members of his consulting team to present a case study on the 5 Star Green Star project in Queensland.
Speakers specializing locally include Indresen Pillay, managing director of Davis Langdon SA and a member of the same company’s global international Sustainability Group, who is scheduled to discuss the costs involved with green building. The GBCSA will also present a range of green building technologies, products and services, alongside the convention.
The information in this article is courtesy of Christy van der Merwe (“Green building rating tool to be launched in November”, Engineering News, 5 August 2008).
If you would like to buy or sell property in South Africa's Overberg region, please visit www.realty1capeagulhas.com.
Monday, August 4, 2008
Owning Property Comes With Other Expenses
Things You Should Know Before You Take Out That Bond
An article published on the property iafrica website indicates that the there is more than meets the eye when it comes to owning property. The current gap between asking prices and selling prices continues to widen, but while this may create more value for money investment opportunities in the residential property market, it does not necessarily mean that you can afford to buy that dream home. This is because the cost of home ownership could be a lot more than you might think.
Marketing director at Betterbond, Deon Lessing says that many people renting property often think that they could easily buy a home and pay the money that would have gone towards rent as their monthly bond. “But what prospective buyers need to understand is that the true cost of home ownership involves a lot more than just a monthly bond payment,” he adds. “Underestimating the true costs of owning and maintaining a house and the land on which it sits is one mistake first-time buyers often make,” Lessing asserts.
Putting interest rate increases aside; there are a number of expenses that homeowners need to take into consideration:
Homeowners insurance: This is a prerequisite when it comes to applying for a home loan. Homeowners insurance cover (HOC) protects owners of property from damage caused to the actual building and all the fixtures and fittings therein. The cover includes fire damage, lightning, explosions, storms, earthquakes, water, hail and even accidental damage to sinks, toilet bowls or other sanitary ware.
Rates and taxes/levies: Homes that are free-standing are subject to rates and taxes determined by the municipality, which cover the collection of rubbish, electricity and water, while sectional title units or complexes charge each unit a levy to cover these costs. Often these levies may include water, but exclude electricity.
Household contents insurance: While this form of insurance is optional, it covers all your personal belongings contained in your home and with the ever-increasing level of crime in South Africa, many households opt for this kind of insurance cover.
Security: Putting in burglar bars or paying an alarm company to fit a security system linked to armed response is considered a necessity, even if your home is located within a security complex.
Maintenance costs: When you own a home, it becomes your responsibility to take care of all the repair work and maintenance costs. There will no longer be a landlord to help you on this. While the cost of maintaining your home may vary depending on the size, Lessing suggests that putting aside R1000 a month is generally a good average amount. Remember that if you do not keep up with the maintenance then the costs could grow exponentially. A house that is in less than perfect condition tends to be on the market longer and sells for less than a house that has been impeccably maintained. Other areas of a home that require maintenance include the garden, swimming pool, painting, carpet repair and replacement, as well as other incidentals that are bound to come up through the ownership cycle.
According to Lessing, “When calculating your total cost of home ownership, you should add up to 40 percent to your base bond payment and that is the amount that you will eventually have to pay. The best way to be ready for the cost of owning and maintaining your home is to plan for it”.
The information in this article is courtesy of Property iAfrica (“True cost of ownership”, 4 August 2008).
If you would like to buy or sell property in Cape Town's Overberg region, please visit www.realty1capeagulhas.com.
An article published on the property iafrica website indicates that the there is more than meets the eye when it comes to owning property. The current gap between asking prices and selling prices continues to widen, but while this may create more value for money investment opportunities in the residential property market, it does not necessarily mean that you can afford to buy that dream home. This is because the cost of home ownership could be a lot more than you might think.
Marketing director at Betterbond, Deon Lessing says that many people renting property often think that they could easily buy a home and pay the money that would have gone towards rent as their monthly bond. “But what prospective buyers need to understand is that the true cost of home ownership involves a lot more than just a monthly bond payment,” he adds. “Underestimating the true costs of owning and maintaining a house and the land on which it sits is one mistake first-time buyers often make,” Lessing asserts.
Putting interest rate increases aside; there are a number of expenses that homeowners need to take into consideration:
Homeowners insurance: This is a prerequisite when it comes to applying for a home loan. Homeowners insurance cover (HOC) protects owners of property from damage caused to the actual building and all the fixtures and fittings therein. The cover includes fire damage, lightning, explosions, storms, earthquakes, water, hail and even accidental damage to sinks, toilet bowls or other sanitary ware.
Rates and taxes/levies: Homes that are free-standing are subject to rates and taxes determined by the municipality, which cover the collection of rubbish, electricity and water, while sectional title units or complexes charge each unit a levy to cover these costs. Often these levies may include water, but exclude electricity.
Household contents insurance: While this form of insurance is optional, it covers all your personal belongings contained in your home and with the ever-increasing level of crime in South Africa, many households opt for this kind of insurance cover.
Security: Putting in burglar bars or paying an alarm company to fit a security system linked to armed response is considered a necessity, even if your home is located within a security complex.
Maintenance costs: When you own a home, it becomes your responsibility to take care of all the repair work and maintenance costs. There will no longer be a landlord to help you on this. While the cost of maintaining your home may vary depending on the size, Lessing suggests that putting aside R1000 a month is generally a good average amount. Remember that if you do not keep up with the maintenance then the costs could grow exponentially. A house that is in less than perfect condition tends to be on the market longer and sells for less than a house that has been impeccably maintained. Other areas of a home that require maintenance include the garden, swimming pool, painting, carpet repair and replacement, as well as other incidentals that are bound to come up through the ownership cycle.
According to Lessing, “When calculating your total cost of home ownership, you should add up to 40 percent to your base bond payment and that is the amount that you will eventually have to pay. The best way to be ready for the cost of owning and maintaining your home is to plan for it”.
The information in this article is courtesy of Property iAfrica (“True cost of ownership”, 4 August 2008).
If you would like to buy or sell property in Cape Town's Overberg region, please visit www.realty1capeagulhas.com.
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