Property 24/10 - 55

Syndication scams fleecing investors
How many of these names are familiar to you? City Capital, Masterbond, Capital Investments, Bluezone, Lifesure Financial Services, PropDotCom, Blue Pointer, King Financial Services?
Let me bring these names into slightly sharper focus with some clues: Sharemax, Realcor, PIC? They are all property syndication schemes or marketers of those schemes.

A quick bit of research will show you just how many property syndication schemes have failed and how many investors have lost their entire life savings as a result because they've been duped into putting their money in these schemes.

I guess it's impossible to protect greedy people or stupid people from losing money but the tried and tested watchword for investing is that if it looks too good to be true then it probably is.

Rate hike possible in late 2011
Another economist has joined a few who are predicting that the SA Reserve Bank (SARB) will hike interest rates in the last quarter of 2011 instead of the first quarter of 2012.

JP Morgan economist Sonja Keller said on Wednesday that the bank expected the SARB to kick off its rate hiking cycle in September as leading indicators painted a more upbeat picture of the economy while pipeline inflationary pressures were intensifying.

"In our view, recent high-frequency and survey-based indicators suggest a notable about-turn with a broadening in growth and more substantial progress is closing the output gap in the near term," she said.

First-time home buying increasing
First National Bank (FNB) says its estate agent survey results have shown a noticeable increase in first-time home buying.

First-time buying of homes is on the increase and is contributing in some way to the reversal of the 'ageing buyer' trend seen in recent years.
The percentage of first-time buyers climbed to 22% in the first quarter of this year, from 17% in the preceding quarter. This percentage compared favourably with the percentages recorded around late-2006, although the absolute volume would still be significantly lower than then because the overall market volumes were considerably lower these days compared to then, said FNB property strategist John Loos.

He said the percentage of first-time buying was arguably a good confidence barometer, because first-time buyers generally had more flexibility regarding the timing of their entry into the home-buying market.

R350m mall in Durban halted
Plans to build a new R350-million shopping centre at Durban's Warwick Junction have been halted because of various legal wrangles over the property that is the site of the city's Early Morning Market.

Yesterday eThekwini's executive committee withdrew the decision to lease certain land as aerial servitude rights to Warwick Mall (Pty) Ltd, which intended to build a R350-million mall on the site.

In February, Carlos Correia, representing the mall developer Isolenu, submitted a letter to the city's strategic project unit advising the council that the company had decided to review its development plans.

Bond applications highest in 3 years
Bond applications reached their highest level in three years and bond approvals were at the highest value since October 2008 according to figures released by bond originating company ooba.

The statistics showed that the average number of bond applications in March was 36% higher that the average monthly number of applications in 2010. However, the figures represent just 36% of the applications recorded when the property market was at its peak in May 2007.

Saul Geffen, chief executive of ooba says that the organisation has experienced consistent month-on-month growth in applications for mortgage finance since the beginning of the current year.

"February was significantly higher and March was even better than that," he says, adding that ooba expected the number of bond applications to continue increasing over the next few months.

Pricing is key to selling property
According to a recent FNB Estate Agent Survey, the average time properties remain on the market is around 19 weeks and 1 day, with 85 percent of sellers having to drop their asking prices, which is an indication of unrealistic pricing in the market.

Sellers can exercise their own initiative and get an online valuation report, which allows them to establish a market-related price and check this against the pricing recommendation from the agent.

When asking prices are set in line with current market conditions, the average time a property is on the market is significantly reduced and the chances of a quick and successful sale are dramatically improved.

Pricing a property correctly from the start can save sellers much wasted time and stress. There is a surplus of homes for sale at the moment, so buyers are often spoilt for choice and will not fall for an over-inflated price. Although sellers frequently feel that their home is worth more and are often disappointed at an agent's pricing recommendation, the market ultimately dictates what a buyer will offer.

Plan to rebuild District Six at last
A final redevelopment plan for Cape Town's District Six has been developed and is being presented to stakeholders in the hope that they will give the multi-billion rand project their full backing.

The plan has taken more than ten years to finalise.

According to Anwah Nagia, chairman of the District Six Beneficiary and Redevelopement Trust, the plan has been finalised with a list of about 3 000 claimants who were reclaiming land that was forcibly removed from them in the 1960s.

The 42 hectare area will have about 4 500 residential properties and once all the claimants have been allocated homes, the balance will be available at affordable rates to buyers. The total building cost for each unit is just under R1-million and claimants are being asked to contribute between R200k and R250k each.

Hillbrow and Sandton on a par
Property economists Rode & Associates' flat rental data for first quarter 2011 show that the average rental for bachelor flats in Johannesburg's inner city has surged to an average R2 800/month.

Demand for rental accommodation in the inner city of Johannesburg has risen so sharply over the past two years that tenants are now paying the same for a bachelor flat in Hillbrow as in leafy Sandton.

Property economists Rode & Associates' flat rental data for first quarter 2011 show that the average rental for bachelor flats in Johannesburg's inner city (including Hillbrow, Berea, Parktown, Joubert Park and Braamfontein) has surged to an average R2 800/month. That's up 38% from R2 025/month two years ago.

Rentals for bachelor units in some of Johannesburg's northern and north-western suburbs including the likes of Parkhurst, Linden and Emmarentia actually dropped over the past two years while rentals in Randburg and surrounds were up less than 6% over the same time.

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