Listed property and retail investments
Savvy investors know that adding listed property helps to reduce portfolio volatility and provides better risk adjusted returns, says Keillen Ndlovu, head of listed property funds at STANLIB.
What’s more, listed property provides stable, growing and fairly predictable income. “From a market capitalisation of R25 billion in January 2004, the South African listed property sector market capitalisation has grown 10 times over the last 10 years to R250 billion by January 2014,” he says.
At a recent Gauteng Chapter of the South African Council of Shopping Centres in Johannesburg, Ndlovu told delegates they still expect positive returns from listed property and average distribution (income/earnings) growth of 6.9 percent over the next four years.
“Our returns will be good but we are more in a normalised environment and therefore it will not be prudent to expect returns that we achieved over the last 10 to 12 years (i.e. 24 percent annualised returns).”
IEASA WC estate agents meeting
A meeting has been called by Western Cape Department of Human Settlements in partnership with key property stakeholders, including IEASA, who want to address transformation in the real estate industry and create a non-threatening platform where unregistered agents are free to participate without legal consequences.
“The Institute of Estate Agents, Western Cape, is the largest representative of agents in the Western Cape and we have been tirelessly asking various bodies and organisations such as the EAAB, SSETA and Government (Department of Human Settlements) to 'give agents a voice'.
"This is the agents’ opportunity and we are encouraging all agents who are not yet registered to attend so that they capacitate themselves and then remedy the registration process,” says Annette Evans, regional manager for the Institute.
Rand weakness impact on property
2013 ended with various residential property numbers looking positive.
In the FNB Estate Agent Survey for the 4th quarter, the residential activity rating was up once more, and a significant number of agents reported residential stock constraints in their areas.
Early in 2014 our perception is that there has been a noticeable increase in media attention and “hype” around residential property.
Initially, this media attention was generally positive, focusing on a rather upbeat residential market at a time when the rest of the economy has not been doing that wonderfully, and repeatedly asking the question as to whether now is “the time to buy”, either for own residence or for letting purposes.
In recent days, however, renewed rand weakness may have started to erode general sentiment in South Africa, on top of its depreciation being in part driven by deterioration in sentiment (along with other key factors such as US Federal Reserve “tapering” or the prospect thereof).
Avoid property rental blunders
There is currently a high demand for rental properties, particularly at the lower end of the residential property market.
Frequently a prospective tenant will have credit checks done by the agent on completion of their application form and perhaps the necessary references done, but because of the particular circumstances of the tenant, they are sometimes given occupation of the property prior to the deposit or first month’s rent being paid.
They could be waiting for a refund on their deposit from a previous rental or have had to pay over part of their deposit due to repairs becoming necessary to their previous leased property, but whatever the reason, this can often be the beginning of a disastrous relationship, says Lanice Steward, managing director of Knight Frank Residential SA.
“If the tenant has not paid the required sums and has possession of the property, there is frequently an ongoing battle to get the full deposit from the tenant or it can result in small instalments being paid over time.”
How to spot a value-for-money home buy
In order to truly determine whether a property is a good value-for-money purchase, a buyer will need to know the elements that contribute to a property’s worth.
In today’s real estate market there is much more to a home’s worth than simply the price the buyer paid for it. There are certain aspects that a home buyer should consider, such as the property’s location and the micro market surrounding the particular sale transaction.
Researching these elements will assist a home buyer in choosing the right property and seeing a good return on their investment over long term, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
He notes that if a home buyer researches the market and has a good understanding of the various details that are involved in a property sale, along with knowing their own personal and financial requirements with regards to the purchase, they will have a far better chance of finding a home that offers good value for money.
Exclusive use areas transfer crucial
Frequently, to the buyer’s disadvantage, upon transfer of a unit in a sectional title scheme the exclusive use areas (EUAs) are not ceded at the same time. This is generally due to an oversight by the estate agent or conveyancer who fails to deal appropriately with the relevant EUAs.
This common problem was identified by Schindlers’ candidate attorneys Kruger and de Matta in a recent article.
This strikes a familiar chord with David Schaefer, director of the national property management group, Trafalgar. “More frequently EUAs are forgotten during the transfer process and the trustees or the managing agent is left to pick up the pieces. Due to this, we now recommend that a deeds search is done as part of the levy clearance process, verifying what the seller is actually selling to the buyer,” says Schaefer.