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How to improve the value of your commercial property
Rawson - South Africa
Have you assessed the value of your commercial property recently? A good starting point is to look at its profitability. There are several ways to increase the profitability of your building and thus add value. “You can garner greater profits by increasing income or by reducing expenses,” says Leon Breytenbach, National Manager of the Rawson Property Group’s commercial division. “Another method to add overall value,” he continues, “would be to make improvements to the actual premises.” Below are these suggestions in greater detail:

How to increase income

Harmonise tenant mixes so that all of your tenants may operate at an optimal level. They need to be in a similar category in order to attract the most suitable clientele for each other and a good example of this is in a retail centre. “You would not place a tyre and brake outlet next to a high-end clothing store,” says Breytenbach, “Instead you group similar stores together, allowing the clientele in each area to be drawn to more than one tenant, thus improving the success of all.” With a conducive tenant mix ,the landlord would be entitled to ask a higher rental from the right tenant. It is not uncommon for some investors to purchase commercial buildings, which have tenant-mix disparities, with the sole purpose of fixing the imbalance, and so increasing the value of the investment.

Credit and mortgage advances
Absa - South Africa
Continued low growth in household credit and mortgage balances

Growth in outstanding credit balances in the South African household sector remained low at 1,4% year-on-year (y/y) up to the end of August 2016. The continued low growth in household credit balances is inter alia the result of data distortions related to developments regarding unsecured credit balances (see explanatory note). The value of household credit balances amounted to R1 470,3 billion at end-August.

Growth in the value of household secured credit balances, which amounted to R1 130,5 billion and 76,9% of total household credit balances at the end of August, slowed down to 2,9% y/y in the first eight months of the year (3,1% y/y up to end-July). This was the combined result of lower growth in household mortgage balances (see below) and a contraction of 0,4% y/y in growth in instalment sales balances, which are largely related to the vehicle sector. New vehicle sales volumes were down by 10,8% y/y in January to August this year, impacted by macroeconomic trends affecting household and business sector finances and confidence.
Credit and mortgage advances

Here’s how the interest-on-interest debt bill hurts home buyers
HomeTimes - South Africa
South African delinquent consumers are paying R20,7bn in overdue interest each year. This is the equivalent of nearly 0.5% of the country’s Gross Domestic Product according to research by HomeTimes.co.za.

As at Q1 2016, the total personal debt position in South Africa was R1,66tn, with 52% of these borrowers more than one month in arrears. And with interest on the overdue amount in the region of 2% a month being added to the principal debt, annualised interest-on-interest adds up to some R20,7bn. In 2015 there were 1,052,700 credit applications approved in South Africa every single month, which means consumers were borrowing money to acquire something they couldn’t afford to pay for with cash.

With 52% of borrowers in arrears on their credit accounts, it’s little wonder the economy is stalled as the interest-on-interest clock ticks away. The money that should be going back into the economy through the purchase of goods and services is being funnelled into the hands of credit providers who simply lend out more and more money knowing that they will be earning interest upon interest from 52% of the people they lend to.
Interest rate burden

What you need to know about subdividing your property
Lew Geffen Sotheby’s International Realty - South Africa
Property subdivision is becoming increasingly commonplace, and even actively encouraged in cities like Cape Town where development to meet the soaring demand for homes is severely curtailed by the natural limitation of its topography.

It also offers property owners a host of benefits, not least of all numerous financial advantages such as an additional source of income, a cash injection to ease financial burden, considerably reduced maintenance costs and rates and taxes as well as the potential to achieve a higher return on investment when selling.

However, Arnold Maritz, Cape Town’s Southern Suburbs Co-Principal for Lew Geffen Sotheby’s International Realty cautions that subdivision is far from the simple procedure one might expect as it not only entails an application for the subdivision of the property with the local authority as well as the re-surveying thereof at no small cost; it is also a lengthy process and can even take years to finalise, especially if the application is delayed by objections and restrictive title conditions.

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