Property 24/10 - 64

Municipalities not spending money
South African municipalities are failing to spend money allocated to them for infrastructure development and figures released by the Treasury for the nine months to March show that in all councils only 45% of the funds had been spent.

The capital budgets of all municipalities amount to R41,6-billion for the current financial year and of that only R19-billion had been spent.

In a statement released yesterday the Treasury said that the lack of spending was a serious concern for government. It has attributed the failures to “dithering” by officials employed by the councils around the country.

Living the land reform dream
Ron Jenkinson, a farmer in KwaZulu-Natal, popped R24-million into his bank account and walked away from his 250 hectare sugar cane and timber farm because he had sold it to the Department of Rural Development and Land Reform.

The farm, Jengro Estates, had been on the market for several years and he had apparently set his price and when the department agreed to pay it the deal was duly signed and sealed. He left the farm and set about doing something else instead.

And a 23-year-old young black farmer, Noah Nyawo, head of the Ikusasa Lethu Youth in Agriculture Project took over the farm and is leasing it from the government for R167k a year.

He says that the department had told representatives of Ikusasa to look for a suitable farm and they chose Jengro Estates. They now have the task of keeping the farm productive and making sure that it provides a profit from the sugar cane and the timber growing on the land.

Debt-to-income ratio at 78,5%
Figures contained in the Credit Bureau Monitor report show that almost half of South Africa’s 18,5-million credit-active people have impaired credit ratings and are battling to meet their monthly commitments.

The debt-to-income ratio for South African households has reached 78,5% according to new figures released by the National Credit Regulator. It says that the debt-to-income ratio of South Africans was between 50% and 60% several years ago when the country was enjoying a more prosperous economic cycle but this has now risen to 78,5%.

Economist Freddie Mitchell says that certain figures, such as consumer debt, should not necessarily cause much concern but when they are combined with the debt-to-income ratio they show that South Africa is facing a problem when it comes to economic recovery.

He says that this ratio must be reduced because the level of savings in the country has dropped correspondingly. He warns that many consumers have large debts, which they are struggling to pay off.

Franchising improves results
This last decade, says Bill Rawson, chairman of Rawson Properties, has shown conclusively that in residential property marketing franchising is by far the best route to achieving real results and ongoing growth.

“In the 20 years or so that we ran with branches controlled and run by a head office team, we had many really good performers – but, almost without exception, they upped their game when they became franchisees.”

Even more significantly, says Rawson, once the franchise system had proved itself, “as it did in a short space of time”, it resulted in the group being able to recruit or promote top level independent entrepreneurial leaders who would never have been content under a centralised branch system, but who flourished when put in a position of real command.

Top 5 renovation tips that pay off
Many homeowners are opting to renovate their home to accommodate their changing requirements or to fix it up before they sell with the hope that it will add to the market price of the property. While home improvement projects can really add to the appeal and practicality of a home, some will add more value onto the bottom line than others.

One way to check the real market value of properties in your area, street or complex is to get an online property valuation report, which will give you information on what other similar homes have recently sold for. This way you can get a more accurate idea of what your property might be worth. Adrian Goslett, CEO of RE/MAX of Southern Africa, says that homeowners undertaking renovation projects cannot expect to splurge on expensive fittings and fixtures and recoup the value of the project when the house sells. “Just because you spent R200 000 on home improvements does not mean that your house is worth R200 000 more,” he says.

Goslett explains that factors such as the direction of the general housing market, the value of homes in the neighbourhood, the nature of the renovation project and how soon the home is sold after the improvement project is completed will have a bearing on how much of the renovation cost is recouped.

Charter for property transformation
The Property Sector Charter Council on Friday hosted a seminar on the transformation in the property industry and the way forward – ahead of the gazetting of the sector charter – to ensure that industry members understand the implications to the sector and business at large.

The property sector remains one of the key economic sectors in the South African economy, estimated at R4 trillion in total value, with 49% and 52% attributed to the commercial and residential sectors, respectively.

“It is because of the recognition of the importance of transformation as a critical imperative for all South African economic sectors that the Property Sector Charter Council commits to strive for transformed property relations in South Africa and to promote a vibrant growing property sector,” said Portia Tau-Sekati, chief executive officer of the Property Sector Charter Council.

Retail property remains strong
Demand for retail property is driving the South African commercial property market according to figures released by the South African Property Owners; Association’s latest index.

It says that the retail property sector is currently experiencing strong demand and is out-performing its commercial counterparts in other parts of the world. British-based property group IPD ranked South Africa as the most lucrative retail property destination among 23 other countries over the past two years.

According to Auction Alliance’s Elias Tzouvanni investor sentiment in the South African retail property market has been marked by a resurgence in consumer spending in 2011 following a spate of negative growth.

“The decline in prices, forecast growth in household consumption, low interest rates and rising levels of employment have eased consumer pressure and boosted the retail property sector,” says Tzouvanni.


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