Absa, IDC to provide funding to taxi operators

1 October 2009
ABSA Vehicle and Asset Finance (AVAF) and the Industrial Development Corporation (IDC) signed an agreement yesterday, the first of its kind in SA, for the bank to provide up to R300m for new taxi operators and black entrepreneurs planning to enter the industry.
EDWARD WEST
For its part, the IDC agreed to underwrite up to 50% of any losses incurred by Absa, if clients financed under the scheme defaulted on their payments.
â??It is in line with our goal of doing all we can to support the taxi recapitalisation projectâ??s objective of putting compliant taxis on the roads. It will lower barriers and make it easier for operators to enter the market â?¦ the agreement will enhance the travel experience and safety of millions of commuters,â?? said AVAF managing executive Marcel de Klerk.
The scheme promoted black economic empowerment (BEE), small, medium and micro enterprises, entrepreneurial development and taxi recapitalisation, he said.
â??We've been a strategic partner of the IDC since 2006, so this joint initiative is a perfect fit for us. The IDC recognises the positive contribution this product will make to developing new transport entrepreneurs and the growth of the taxi industry in particular where the potential for creating new job opportunities is greater.â??
â??This is in line with the IDCâ??s leadership in development strategy where we seek to stimulate the creation of jobs by funding opportunities that promote entrepreneurship, BEE and SME development,â?? said Katinka Schumann, divisional executive for services sectors at the IDC.
â??It is yet another shining example of how government and the private sector can form partnerships that benefit and develop our country.â??
In terms of the agreement, AVAF will, in co-operation with the IDC, offer funding to new or established black taxi operators, black-owned companies and taxi associations.
The interest rate on loans granted would be capped at prime +4% and applicants needed a deposit of 15%-20% of the total loan-value.
Projected route income would be analysed by the bank.
weste@bdfm.co.za

Electricity shortfall looming

 

President Thabo Mbeki's advisory council on electricity has warned that if consumers don't further reduce power usage, there could be a shortfall in coming weeks.

Electricity shortfall looming

Petrol breaks through R10

 

The retail price of petrol will increase by between 75 to 81c a litre next week, says the DME.

Petrol breaks through R10

PE getting luxury development

PE getting luxury development
2008/06/27

Port Elizabeth and Perth, Australia, are joining forces and spending R300m to develop 45 luxury residential units.
The Jutland Point development is a partnership between Len Whittal, a native from the Eastern Cape, and Ian McDonald, a property developer from Perth, who together own 4Front Investment Holdings.
It will be 4Front's fourth development in Port Elizabeth, apart from its retail properties and office and storage developments in Deal Party, Groenbossies and Newton Park.
During the launch in Port Elizabeth, MacDonald said they are positive about the future of the metro and will be investing R500m in the city's property market over the next two years.
Investors will be paying between R4m and R20m for a unit in Jutland Point. The sizes of the units range from 110sq m to 346sq m.
Every unit will have a view of the harbour, city and Baakensvallei and have at least one private balcony.
The 13-storey building has two parking levels. Additional features include a diesel power generator, broadband internet access and CCTV cameras.
MacDonald says the development will be completed before the start of the 2010 Soccer World Cup.
The developers say Jutland Point will have some of the most luxurious units that Port Elizabeth has ever seen. This development will breathe new life into the historic CBD.
Jutland Manor on the premises, which used to be a famous restaurant and dates back to the 1920s, will be retained.
Jutland Point will be covering 30% of the premises, while the rest will be rehabilitated by planting indigenous plants, MacDonald said.
Asked why such a development was undertaken in Port Elizabeth, Macdonald said: "Why not?"
The city reminds him of Perth 10 to 20 years ago.
"Port Elizabeth is ready for investment and development. It will soon have two operating harbours and receive unmatched publicity during the Soccer World Cup in 2010. Several companies also export successfully from here, and there are nature reserves, beaches, as well as colourful people and cultures." – Riana de Lange, Sake24

PE getting luxury development

Jhb development launching 28/6

Jhb development launching 28/6
2008/06/27

A new African-Contemporary-style development will be launched on 28 June 2008 in the south of Johannesburg.
Stone Quarter will be located in Eye of Africa, a 677 hectare golf estate in Alewynspoort.
The masterplan for Eye of Africa offers potential homeowners the choice of either free hold stands where they can design and build their own homes or to purchase in a sectional title village designed to meet the estate's architectural guideline and standards.
Stone Quarter will host 230 two and three bedroom townhouses ranging between 144sq m to 204sq m.
The architectural style includes raw materials to ensure a design completed with features including stainless steel Miele ovens and hobs, granite kitchen tops, low voltage lighting, lock-up garages, private pools and water features offering.
Community life in Eye of Africa include a café, the village green, kids' club, running and cycling trails, landscaped parks and a community centre.
The development is within phase one of the Eye of Africa development with Stone Quarter prices ranging between 1,3m to 1,8m and is set for completion in 2009. Stone Quarter will be launched on 28 June.
For more information contact 011 469 1330 or click here to visit the website.

Jhb development launching 28/6

Is it time to fix mortgage rates?

Is it time to fix mortgage rates?
2008/06/27

After ten consecutive interest rate hikes, homeowners are finding it difficult to meet their repayments. Many are considering fixing their rates to hedge against future hikes. Bond Finance expert Ian Wason says one should consider all the options before going out and looking for a fixed mortgage rate.
According to Wason, homeowners have two options: hang on, or get out of the property market altogether. If you have cut your budget again and again and can't seem to make ends meet you should consider selling some assets, as one thing is for sure, your situation will get worse as interest rates, oil and food prices continue to rise.
"Debt consolidation, remortgaging and reducing other monthly expenses should be looked at before people decide to fix their rates," says Wason. "We are seeing a lot of opinions as to where interest rates are going at the moment. These are just opinions, as nobody really knows. We are seeing a lot of 'false horizons' as to where of the top of the interest rate cycle is, purely because we have no idea where oil and food prices will go, and this is now what is causing the inflationary pressure, not the demand side driven by easy credit. "
"It was the combination of negative equity and a stalling economy that sent the UK property market down 35% in the early nineties. I believe the problems in SA at the moment are on a similar scale," he says.
Homeowners must not forget that the chances are they could rent the same property for less than half of what they are paying in mortgage repayments on a 100% mortgage.
Don't follow the trend if you can counter the knock
"While rates are rising at a speed that is crippling, it is important to remember that you don't have to stick with the rate that you got at the start of your current mortgage," says Wason. "So, after you have had your mortgage for a while you may be able to negotiate a better interest rate because you could be a far less risky client to the bank. If you fix your rate now, you may be negating the benefits that a variable rate would allow in the long term. It is important that you shop around for a better rate on your current mortgage before joining the wave of fixed rate enthusiasts."
In addition to this, he says the individual should also do a complete analysis of their expenses and try to reduce their insurance, bank and medical aid costs.
Remortgaging could be a better option, so shop around
Wason argues that while a fixed rate may be worth your while for the next 18 months, it is important to remember that your mortgage is going to last at least 20 years. In that time, you may well be able to negotiate a better rate on your bond as your salary increases or your reduced risk profile starts to take effect.
"South Africans need to get far more dedicated to shopping around for a better rate – they would be surprised what they could be saving themselves."
A Fixed rate could just cost you
He adds that going out and seeking a fixed rate mortgage can be costly because nobody knows how long the rates rise is going to continue. "While the mood at the moment seems to suggest that we should all go out and fix our mortgage rates, it is important to view this in light of your own situation."
"If you could be getting a better rate on a variable bond, you are better off trying to negotiate that. Don't simply call up and ask what fixed rate the bank could offer you."
Looking at the numbers
For a R500,001 mortgage, where your loan to value is less than 80%, you can currently fix your rate for the following rates:

For the same mortgage on a variable rate you should be getting a rate of Prime less 2% = 14% (with an interest rise of 1% scheduled in on Thursday) therefore your repayments are R6,217.63.
Another option would be SA Homeloans' interest only rate of 13.5%, giving you a repayment of R5,995. This is the lowest monthly commitment, but remember that you are not paying off any capital.
What should you do?
Wason says it is important to remember that everyone's situation is different. No option is best for everyone so you need to do your own budget, establish what your priorities are and take the mortgage that best suits your situation. Also remember that you can always change your mortgage product again, as you may decide to get an interest only mortgage, ride our these stormy times and switch back to a capital and repayment mortgage once interest rates start coming down or when you can afford to pay more in.
For more information contact ian@bondbusters.co.za. Click here to visit the website.

Is it time to fix mortgage rates?

Banks 'stand up' for borrowers

Banks 'stand up' for borrowers
2008/06/27

Banks have an important role to play not only in getting people into houses, but also in keeping them there, which is why they have been prepared to make some "tough calls" lately that could quite possibly lose them a substantial amount of new business.
Such calls include the controversial decision to re-introduce the deposit requirement for home loan borrowers.
Following on the heels of 10 consecutive interest rate rises and the introduction of the National Credit Act (NCA), the deposit requirement is likely to further reduce the number of potential buyers able to qualify for a home loan, "but is still considered necessary now to ensure that our customers are not exposed to over-indebtedness", he says.
Speaking at the Homenet real estate group's national conference recently, Luthando Vutula, the new head of home loans at Absa, said the bank believed that by doing this, it would assist customers to make better buying decisions because they would have to contribute financially themselves if they wished to go ahead with a purchase.
"And while we all breathed a sigh of relief earlier this month when the Reserve Bank confirmed a 50 basis points increase in the interest rate, we can't afford to assume this is the last increase we're going to see this year. As a responsible lender, we also need to ensure that customers buying homes today have enough room in their budgets to weather the storm of possible future interest rate hikes."
Looking ahead, he told conference delegates the next two to three years would see all players in the real estate industry having to innovate new ways of making money "while protecting our customers from short-term impacts that could derail their long-term investments".
Meanwhile, he said, now was the time for serious property investors to start shopping around. "The best time to buy will be in 2009," he predicted.
"Patient investors will then be spoiled for choice and will be able to build a portfolio that will yield good results in years to come."
In addition, he said that buying a home remained the single most important purchase any individual could make.
"While the dynamics of the real estate sector may have changed since the boom years, a home remains a good investment that sets the foundation for wealth generation. At the moment, buyers may just have to adjust their expectations and start with a smaller home to ensure future affordability. Then when the cycle turns they will be in a position to upgrade to something closer to their original aspirations."
For more information contact Martin Schultheiss on 031 266 9850 or click here to visit the website.

Banks 'stand up' for borrowers

There are positives in every market

It's time for consumers to stop focusing on the immediate problems in the real estate sector and start focusing on the bigger picture.
So says Berry Everitt, managing director of the Chas Everitt International property group, who notes: "Homeowners and sellers are currently preoccupied with a possible decline in prices but they need to realise that this is part of the perpetual economic cycle, in which the prices of all commodities – including property – go up, go down and then go up again."
He points out that homeowners who bought their properties five years ago and held them today have an asset that is worth at least 100% more than they paid for it, "so if they have to sell today they may not get what they would have got last year, but it is highly unlikely they will actually lose money".
On the other hand, they may be able to upgrade for less than it would have cost them last year. And if they continue to hold their property, they will derive more benefits when prices start to rise again.
Meanwhile, such owners may also have had the opportunity to utilise some of the increased equity in their properties to improve their lifestyle. "They may have chosen to further their education, perhaps, and got a better job as a result. Or they may have used the money to buy another property and increase their asset base. These are the sort of benefits to be derived from the upward part of the price cycle.
"But rising prices are dependent on demand, and that tapers off at a certain level due to lack of affordability. To enable new buyers to enter the market and keep the economic cycle going, prices have to come down or at least level off at some point. This is where we are now, and from a seller's point of view, SA is a great place to be, because it has one of the few real estate markets in the world where there are literally millions of potential buyers champing at the bit to become homeowners."
Indeed, a recent survey conducted by Markinor for the Reader's Digest shows that more than 50% of South Africans rank owning their own home as their most important life goal, "which means that there is actually a huge market for homes that are for sale, provided they are pitched at the right price".
This is, he says, just one of the opportunities inherent in the downward phase of the economic cycle. Another is that higher interest rates at the moment are driving up the demand for rental properties and the returns to be made on those properties. "This is of course bringing savvy investors back into the market and as that demand also grows, it will also help to absorb inventory and start creating the conditions for prices to start to rise once again.
"Consequently, we do not believe this should be a time for scaremongering about the current state of the market, because that will keep changing. Instead it is a time to be looking at the bigger picture and finding ways to maximise the opportunities it always presents."
For more information contact Berry Everitt on 011 801 2500 or send an email. Click here to visit the website.

There are positives in every market

Affordable homeowners shellshocked

Affordable homeowners shellshocked
2008/06/13

The ongoing pattern of interest rate rises is making affordable housing increasingly less affordable, and homeowners in this market sector are financially shellshocked.
The 0,5% interest rate rise announced by the SA Reserve Bank today (12 June) has prompted the head of one of the country's leading developers of affordable housing to suggest that Government should relieve the burden on cash-strapped owners and aspirant owners of homes in the lower end of the market by adjusting the structure of the interest rate system.
"The fact is that the ongoing pattern of interest rate rises is making affordable housing increasingly less affordable," says David Wentzel, CEO of JSE AltX-listed RBA Holdings, one of the foremost turnkey suppliers of fully bonded homes in the lower (R300 000 to R700 000) price bracket.
"Perhaps the time has come for interest rates on affordable housing to be capped so that the collateral damage done to homeowners in the war against inflation is reduced – if not, ideally, eliminated. After all, homes do not contribute to the inflation spiral."
To illustrate his point, Wentzel says today's 0,5% hike adds over R400 to the income required to qualify for a bond on a R300 000 entry-level affordable house.
He points out that, unlike the mainstream residential property market, buy/sell decisions in the affordable housing sector are not dictated by sentiment but by cold, hard economic factors.
"Coming on top of the previous nine consecutive interest rate increases, and given the sharp spiral in fuel and food prices, homeowners in this market sector are financially shellshocked.
"Unless there is a homeowner-friendly change in the interest rate structure I cannot see further rate increases being sustainable in the affordable homes market," Wentzel adds.
He says the impact on RBA Holdings of the persistent interest rate rises since mid 2006 has been cushioned by the fact that the group anticipated it and has systematically reduced the sizes of both the sectional title and freehold homes they offer while, at the same time, increasing the density of units per hectare – thus maximizing the use of land and infrastructure.

Affordable homeowners shellshocked

Pitfalls that can delay transfer

Pitfalls that can delay transfer
2008/06/13

Sellers should be aware of pitfalls and hidden costs which can delay the registration of the transfer of a property.
Bev Nelson of Shepstone & Wylie Attorneys property department explains that if the property is sold with the assistance of an estate agent then the agent will usually provide a general sale agreement, which is required by law. "However, if there is no agent involved, or a specialized agreement is necessary, this will need to be drawn up by an attorney at a cost to the seller, unless the parties agree otherwise," she adds. Using an estate agent also carries estate agent's commission which is normally paid by the seller.
Sellers must be aware of their responsibilities once the agreement is signed and a conveyancer is appointed, advises Nelson. These include:
• The payment of all rates up to the date of transfer If the property is conventional,
• If the property is sectional title, all levies need to be paid up to the date of transfer.
• The cost of an electrical compliance certificate certifying that the property is reasonably safe, plus the cost of any repairs necessary in order for the certificate to be issued. This certificate is a legal requirement.
• The cost of an entomologist's certificate certifying that the property is free from wood-destroying insects (not white ants), plus the cost of any procedures (e.g. tents) necessary in order for the certificate to be issued. This is not a legal requirement however it is usually required by bondholders.
If the property is bonded at the time of selling then that mortgage bond will need to be cancelled simultaneously with the transfer of the property to the buyer. The bondholder will require a guarantee from the conveyancer that any balance owing on the bond will be satisfied on registration. "Therefore the balance owing on the bond will be settled out of the purchase price by the conveyancer before paying the balance of the purchase price to the seller. The seller is responsible for the costs of the cancellation of the bond," says Nelson.
If the property was not bonded then the seller should have the title deed. If the title deed has been lost or destroyed, application can be made to the deeds office for a certified copy. Once the Registrar is satisfied that the deed cannot be found he will issue a certified copy of the title deed which will, for all purposes, be treated as if it were the original. The seller is responsible for the cost of obtaining the copy.
Nelson warns that the seller should be careful to include an occupational rental clause in their sale agreement, as if the transfer is delayed and the buyer moves in, without this clause there will be no occupational rent payable. "Especially since most sale agreements include a clause that the agreement cannot be varied unless it is in writing and signed by both parties."
The seller should also note that the general position is that they will only be paid the purchase price and the risk of the property will only pass to the buyer, on registration of the transfer. However, this will be subject to the terms of the sale agreement, adds Nelson.

Pitfalls that can delay transfer

SA housing market still 10th best

SA housing market still 10th best
2008/06/11

Property markets in UK, Canada, New Zealand and Norway are struggling, with SA still the 10th best performing market globally.
South Africa is not the only country experiencing a rapid slowdown in house price growth. A report released last week on global housing markets by British based property group Knight Frank confirms that a number of other countries including the likes of the UK, Canada, New Zealand and Norway have also slipped from double digit to single digit growth territory over the past year.
The report ranks SA as the tenth best performing housing market among 34 countries in first quarter 2008 with growth of 8,8%. That's down from sixth position a year ago when SA house prices were still rising at 13,6%.
Overall global house price inflation came to an average 6,1% in first quarter 2008, down from 9,8% a year earlier. And although global house price inflation continues on its downward trend, there have been a few noticeable exceptions. Five out of 34 countries worldwide are still fetching house price growth of more than 20%, including Bulgaria (31,5%), Singapore (29,9%), Hong Kong (28,8%), Jersey (28%) and Russia (21,7%).
Seven countries have seen house prices dip into negative growth territory in first quarter 2008. These are Israel (-0,2%), Denmark (-0,7%), Japan (-0,7%), Germany (-5,2%), Ireland (-8,8%), Estonia (-10,7%) and Latvia (-20%).
Liam Bailey, head of residential research at Knight Frank, says there is no doubt that the number of markets where prices have fallen has increased. ``A year ago, 35% of the markets covered by Knight Frank's global house price index saw house price inflation in double figures. In first quarter 2008, this proportion had fallen to just 20%.'
Bailey notes that a number of markets have seen a sharp reversal of fortune since mid-2007 on the back of the sub-prime fall-out and the global credit crunch. The UK housing market has been particularly hard hit. In first quarter 2007, the UK was still the tenth best performing market in the world. It has since slipped to 24th position.
Bailey says the UK housing market is experiencing its most significant slowdown since the early 1990's. ``On almost every measure across the prime and mainstream markets and the new build sector, the market has shown worsening performance over the last six months.'
According to Bailey, the weak sentiment in the UK housing market is reflected across the wider economy, with consumer confidence, as measured by the NOP Index, at its lowest level since April 1994. With some regional and local market variations, house prices across the UK have been falling since September, with overall price growth of only 1,1% in first quarter 2008 (11% first quarter 2007). - Joan Muller

SA housing market still 10th best

Gauteng tenants worst defaulters

Gauteng tenants worst defaulters
2008/06/09

11% of Gauteng tenants did not pay rent at all in the first quarter of 2008, as opposed to only 6% of Western Cape tenants. These shock figures were supplied yesterday by the Tenant Profile Network (TPN), a registered credit bureau and developer of the first rental payment profile database of its kind in South Africa.
"Rising debt among consumers, combined with dramatic increases in fuel and food prices, may affect the way tenants pay their rent in the future," says Michelle Dickens, MD of TPN.
The company released statistics from its database which show that in the first quarter of 2008 only 72% of tenants were paying their rent on time. This is up from the last quarter of 2007 by 3%. In spite of the defaults, Dickens believes the increase in paying tenants is good news for the industry.
Audited figures from all credit bureaus in SA, which have been approved by the National Credit Regulator, show that there are 16.9 Million credit active consumers who average 3 accounts per consumer totalling 50.98 Million accounts. A significant portion of these are tenants who are renting.
Property trends from TPN for the first quarter of 2008 indicate that 28% of tenants are paying late or not at all, this could be a caution to estate agents and property owners.
Dickens says that although consumers are trying to cut their costs by renting instead of buying, the industry still needs to find ways to ensure that tenants pay their rent.
"Credit providers are increasingly critical of whom they take on and estate agents and property owners are now following suit. Property-owners and estate agents need to assess the behaviour profile of their tenants to ensure they will pay their rent at the beginning of the month," says Dickens.
"Although it is not a NCA requirement that estate agents assess the affordability of the prospective tenant - this type of assessment is becoming a best business practice of the industry. It is in the best interests of all parties to assess affordability of the prospective tenant, to ensure he or she is not placed under additional pressure as a result of entering into a lease agreement where the monthly rental is out of proportion to their affordability. Affordability is not measured on earnings alone, but rather the earnings less expenses," she says.
This is not all doom and gloom though, says Dickens, as the more rental agents and landlords that register with a rental payment database such as TPN, the more they can reduce their risk by profiling the tenant before hand.
"Now, agents can spend the first 7 to 10 days of the month focusing on new business and growing the market instead of chasing the 28% of tenants who are bad payers," she says.
TPN has developed the only trusted rental payment profile database of its kind in South Africa and in fact globally that has been profiling tenants for over 8 years. Their database combines information from TPN and other highly valuable sources to provide the most comprehensive behavioural profiles on tenants and prospective buyers in the property industry today.
For more information contact 0861 876 000 or send an email. Click here to visit the website

Gauteng tenants worst defaulters

Property owners: Watch the tax

Property owners: Watch the tax
2008/06/09

Property owners will need to keep their eye on tax changes that kick in at the start of 2009.
As of January 1, 2009 the definition of the dividend paid on property assets will change and this will make a significant difference to the way the secondary tax on companies (STC) will be handled.
Tax partner at Cameron & Prentice Chartered Accountants, David Warneke, illustrates the change by way of example.
"Say a close corporation purchased a building (as a capital asset) in 1990 for R2m. The value of the building on October 1, 2001 (the date on which capital gains tax became effective) was R5m and the value today is R12m.
"If the close corporation were to sell the building today for R12m, distribute the proceeds as a dividend to its members prior to January 1, 2009 and then deregister, the STC would be worked out on the post-2001 portion of the increase in value - that is, on R7m," he says.
Were the proceeds to be distributed after January 1, 2009, the STC would be calculated on the total gain - on R10m - resulting in additional STC of R272,727, assuming that there are no other reserves in the close corporation.
Many investors have utilised trust structures as a shelter against tax.
Warneke says that properties which are directly owned by a trust will not be subject to the same legislation. However, if the trust holds a controlling interest in a company or CC, which in turn owns a property, then this will be subject to the tax.
With this change in the way that gains will be treated, property owners will need to take a decision on which way the property market is headed.
Recently released poor figures relating to the residential property market and warnings from the head of a major real estate agency may encourage highly geared investors to consider exiting these positions.
Property investors should take into account the tax implications and make a call on their exposure to the market. - Marc Ashton, Fin24.com

Property owners: Watch the tax

Caution in market good for rentals

Caution in market good for rentals
2008/05/29

The effects that South Africa's rising cost of living and high interest rates is having on the property market's residential sales is no secret.
Sentiment has shifted from confidence to caution, however, the effects have been positive in the residential rental market.
"Potential home buyers are renting, placing their home-buying decisions on hold due to the diminished affordability of property. They want to observe what is happening with interest rates before they consider purchasing property. Therefore, the demand for rental properties has escalated dramatically," says Marsha Haupt, sales director at Betterbond.
Marsha notes that the first edition of the FNB Residential Property Barometer for the rental market in the first quarter of 2008 shows a positive picture of the rental market when compared with the main FNB Residential Property Barometer for the home buying market.
The FNB barometer also shows that on a scale of one to ten, the activity in the home buyers market is at a mediocre level of around 4,96, whereas the rental market's activity is above average at 8,4.
According to FNB Home Loans property strategist, John Loos, monthly rental repayments are considerably lower than 100% bond repayments, which make the rental option increasingly popular during these times of rising interest rates.
Investors are now "dipping their toes" back into the buy to let market. This is resulting in the recovery of the rental market.
People who have over-borrowed to purchase homes are experiencing cash flow problems. This has led to luxury or high bonded properties being placed on the market with urgency to sell. "For this reason we are seeing a stabilisation in the property market as properties are placed on sale at more realistic price levels.
"The gap between rental and bond repayment rates in metro areas is approximately 65% of bond repayments," says Haupt.
"Therefore on a bond of R500k, the repayment would be R6,585 whereas rental would be R4,300". In non-metro/coastal areas the gap is about 60%, with reference to the same example, the rent would be R3,900.
Developers are attracting investors with a buy-to-let promise. They assure investors of rental returns, however, it will not materialise if the investor is taking an 80% to 100% bond. This approach will make the developer rich but will most definitely place the inexperienced investor in financial hardship as the rental will not cover the bond repayment.
"In spite of the high interest rates, the slowing price growth is an opportunity for investors with money to buy. Properties are reaching more reasonable price levels and at some point interest rates will inevitably start to fall and prices will once again start to climb, providing good returns for investors," Haupt concludes.

Caution in market good for rentals

Major rate hike shock

Major rate hike shock

Economy

South Africans are in for the biggest interest rate jolt in a decade, as Reserve Bank governor Tito Mboweni considers a 200 basis point hike.

Finance24
Wednesday, 28 May 2008 23:45:00

Major rate hike shock

Residential building inflation up

Residential building inflation up
2008/05/23

South African residential building costs inflation measured 10,9% in the first quarter, up from a revised 6,8% in the previous quarter, the FNB Commercial Property Finance Residential Building Cost Index showed on Thursday.
The index reflects the average building cost per square metre, as charged by building contractors when winning tenders in the formal residential property sector. It excludes affordable and so-called "RDP" housing.
The average building cost per square metre was measured at R5,864 for the first quarter.
"However, this mild rise from the previous quarter comes at a time when residential market conditions are extremely weak, and contractor pricing power must be low, leading to the belief that input cost pressures are beginning to drive building cost inflation higher," said John Loos, FNB property strategist.
He added that if the uptick was the start of a longer trend, it would add to the woes of an industry already under pressure.
"Rising building cost inflation would probably slow the supply of new stock further," said Loos. - Tiisetso Motsoeneng, I-Net Bridge

Residential building inflation up

Eskom to build R2,9bn power station

Eskom to build R2,9bn power station
2008/05/23

Eskom has announced that it has awarded a R2,9bn contract to a consortium of South African companies to construct the main civil works at Lephalale in Limpopo.
The contract was awarded to the Medupi Power Station joint venture, a consortium made up of Murray and Roberts, Grinaker-LTA Civil Engineering and Concor.
"Medupi is one of the key installations in Eskom's New Build Programme geared towards closing the current supply-demand gap.
"We are pleased with each milestone reached in the project," said Eskom's chief officer for generation Brian Dames.
The Medupi Power Station will be South Africa's first green field coal-fired station to be built in more than 20 years.
It is expected to cost an estimated R80bn to build.
The first unit is scheduled for completion in 2012 with the entire station completed by 2015.
"It will be the biggest dry-cooled power station in the world and will have an installed capacity of approximately 4,800 Megawatts," Dames said.
The contract covers all civil engineering work and construction of roads, drains, foundations, column supports, floor slabs and basements.
Also included a utility spine and connectors beneath an auxiliary bay, the boiler house and turbine hall.
The awarding of the contract followed a thorough tender evaluation and adjudication process.
A number of preliminary steps have already been taken to prepare the ground for the construction of the Medupi Power Station, including the placement of the boiler and turbine contracts. – Luyanda Makapela, BuaNews

Eskom to build R2,9bn power station

Homebuyers baulk at poor security

Homebuyers baulk at poor security
2008/05/23

Inadequate security measures are a definite turn-off for prospective homebuyers.
This, says Martin Schultheiss, CEO of the Homenet estate agency group, is becoming more evident as suburban homes have to compete with secure complexes and gated estates in an increasingly softer property market.
"Good security has become one of the prime criteria among homebuyers and homes with inadequate security measures are being punished by the market," he says.
Most buyers prefer a home with security in place and are not keen to buy property where they would need to install alarms, burglar bars and other deterrents.
"Apart from the additional costs they would incur to install protection, most are not willing to move into an unprotected home, even for a short while," Schultheiss says.
"And buyers who are prepared to install their own security are increasingly driving a hard bargain when it comes to making an offer to buy. They are calculating the likely costs of top-of-the-range measures and insist that sellers subtract the total from their asking prices."
Buyers are also no longer convinced by arguments that certain residential areas are relatively "safe" or "crime-free" and any owner contemplating selling his home would be well advised to update security.
"It is also important for security measures to be clearly visible. At a minimum this includes burglar bars, security gates, security lights and preferably an alarm system."
For more information contact Martin Schultheiss on 031 266 9850 or click here to visit the website.

Homebuyers baulk at poor security

Land claims to miss target

Land claims to miss target
2008/05/23

The department of land affairs is going to miss its target of finalising all outstanding land claims by the end of this year.
Minister Lulama Xingwana admitted this in Parliament on Wednesday when she spoke in an extended committee of the National Assembly in the debate on her departmental budgets.
She said the commission for the restitution of land claims had settled more than 95% of total claims lodged, and was left with 4,998 very complex rural claims.
"A number of challenges are still confronting us in the finalisation of the outstanding land claims," she told MPs "As a result of these challenges, between 2% to 3% of these claims may not be finalised in this financial year."
The challenges she said included cases in the land claims court, and others disputed with landowners around land prices and the validity of the claims. There are other claims held up because of disputes around traditional leadership and boundaries, and because of community and family disputes.
The commission, she said remains committed to ensuring that all land claims are eventually settled, and to that end, a memorandum and an action plan for the finalisation of the outstanding claims had been submitted to Cabinet.
"The economic models for settling forestry claims and claims with mineral rights (for example Anglo American, Sappi, and Mondi) are in the final stages and should also assist in addressing some of the more challenging claims. We are working closely with the department of environmental affairs and tourism, SANParks and other agencies towards the finalisation of co-management agreements for the claims on protected areas." - Michael Hamlyn, I-Net Bridge

Land claims to miss target

Consumers defining fractions market

Consumers defining fractions market
2008/05/22

The fractional ownership market in South Africa is being driven by consumer demands, not by the promoters, and the projects that will emerge victorious will be those that cater for what consumers are looking for. So says co-founder of fractionalownership.co.za and member of the South African Association of Fractional Intermediaries (SAAFI) Working Committee, Dirk Wilson.
"It really boils down to what service levels the South African consumer expects from a luxury lifestyle investment such as fractional. When they arrive at their fractional holiday home at Pinnacle Point or Zimbali they expect a hotel-style check-in, cleaning services and check-out facilities. Everything must be of a very high standard in terms of value-added on-site services - for example, being able to phone down to reception and book a round of golf or organize fresh towels for the morning. They can't just arrive at a game farm, be pointed 2 km down the road, given their keys, and told 'There's your bush lodge, see you in a week!'."
Wilson explains this trend of consumer control further: "There are many resort developers who are looking to do mixed-use developments, and they want fractional to be a component. Undoubtedly the on-site hospitality provider is the most intricate part of making a successful project – those who do not have a specialized hospitality or hotel operator on the resort and don't have the standard of say a Three Cities or Legacy, have to provide an equivalent standard - because this is what the market expects. Many developments just don't have the infrastructure to be able to provide this standard.
"Many leading fractional promoters now are only taking on properties where there is a leading hotel operator at that resort, since the market demands it. Feedback from the recent World Fractional Ownership Conference in San Francisco, USA, is also that by far the most successful fractional ownership resorts in the USA are those serviced by the likes of Marriott, Hyatt Hilton and Fairmont, and the South African market is following suit. It is mirroring what is happening in the USA – where they have 8 years' more experience in this arena than us - and we see it as a good sign that our market is aspiring to live up to that same standard of shareholder hospitality and exchange."
He says that feedback from consumers that have bought fractional indicates is that their experience of top-notch services is the defining factor that really makes their purchase worthwhile. "Fractional ownership should equal shareholder hospitality and comfort – and this is a reality that developers have to face. We endorse this and aim to educate potential players in our regular workshops of what logistics they need to provide in order to roll out a successful fractional ownership resort."
fractionalownership.co.za holds workshops every 2 months – one each in Cape Town and Johannesburg, the next scheduled for mid-June. Says Wilson: "We are happy to assist the developers and service providers. We see many at our workshops that would like to do fractional because it adds value to their entire development, but they have to be able to live up to what the consumer expects from their purchase." He adds that he is now seeing many players from the financial sector attending the workshops – since their clients want to know whether they should buy shares in fractional, a trend once again driven by the consumer.
To book for the workshop or for any enquiries contact Dirk Wilson on 072 591 0582 or 021 556 5064, email www.fractionalownership.co.za or click here to visit the website.
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Consumers defining fractions market