Urban regeneration: Viability and how it affects property values
As cities age, buildings deteriorate and become overcrowded. Residential areas expand further from the CBD, causing commerce to follow, until the city centre is merely a ghost of its former self. Rentals drop, vacancies rise and criminal elements often move in, making an erstwhile vibrant CBD dangerous and unproductive for both commerce and residents. Investor portfolio values drop to a new low, and this is when it becomes clear that there is a need to regenerate the area, or accept a loss and sell out. Regeneration has been accomplished in many cities of the world, including in South Africa.
“Looking at the remarkable changes taking place in Cape Town, Johannesburg and Pretoria, it is obvious that regeneration is both possible and successful, if thoughtfully executed,” says Leon Breytenbach, National Manager of the Rawson Property Group’s commercial division. However, it is essential that local municipal and business leaders buy into the exercise.
Buy-to-let property: How to calculate your return on investment
Owning properties can provide investors with steady rental income or capital appreciation when the property is sold for a profit. However, it is important to measure the return on investment (ROI) to determine the level of profitability of the property.
Before investing in a rental property, there are a number of key factors to take into account, explains Craig Hutchison, CEO of Engel & Völkers Southern Africa.
“Location and the future of the location is the first and foremost aspect to consider when purchasing an investment property that will result in capital appreciation. The next features to take stock of are fixtures and fittings. Are they durable and will you have high maintenance costs?”
Thirdly, says Hutchison, establish if there is a demand for a particular property. "Do your homework on the area and the types of properties that are in demand. It makes more strategic sense to invest in a two bedroom unit instead of a three bedroom house if the demand for the former is greater.”
Prospects for SA home buyers already looking brighter
Ahead of the Medium-term Budget Policy speech and the SA Investment Summit this week, things are already looking up for home buyers and owners in SA thanks to a stronger rand, declining inflation and improving employment prospects.
“This follows President Ramaphosa’s national jobs summit earlier this month and his appointment of former Reserve Bank Governor Tito Mboweni as the country’s new Finance Minister a few days later,” says Rudi Botha, CEO of BetterBond, the country’s leading bond originator.
“These two events have already seen the rand strengthen against the dollar and other major currencies, and prompted major ratings agency Moody’s to delay any review of SA’s credit rating, which it currently ranks as positive with a stable outlook.”
Is a heritage home a good investment?
The idea of buying a heritage home appeals to a very discerning buyer. More often than not, investors in historic property usually have an interest in older properties. Heritage home buyers are able to see the diamond in the rough and look forward to restoring old wood, replacing old electrical systems and repainting in original or period accurate colours.
“We look at some reasons why the appeal of these homes has stood the test of time,” says Mike Greeff, CEO of Greeff Christie’s International Real Estate.
“Heritage homes have a timeless appeal about them. When you invest in property that has been declared a heritage site you are sometimes not buying the latest fixtures and finishes, but rather contributing in your small way to the legacy of a home. You are buying a piece of history, which in many cases are the South African Cape Dutch, and in doing so, are including yourself and your family in the property’s history. These homes, if properly maintained, are an outstanding investment financially.”
How to go about getting a home loan if you’re self-employed
Property is a big investment. In fact, it’s one of the most significant that many people will undertake in their lifetime. Applying for a home loan is almost always a stressful experience - not the actual process, but rather the fear of not meeting the stringent criteria - but needn’t be if you’re organised and your paperwork is up to date, particularly if you’re self-employed.
Freelancers, contract workers, sole proprietors and small business owners have no reason to believe - or accept - that they’ll never own a property. “Being organised and having your affairs in order is the first step, and already gives you a great advantage,” says Steven van Rooyen, Principal at Leapfrog Milnerton.
In order to qualify for a home loan, Van Rooyen says you need to demonstrate that you can comfortably afford the monthly bond repayments, which is easier if certain matters are clear.
Van Rooyen provides advice: