Contents SOUTH AFRICAN REAL ESTATE INVESTOR PR OPERT Y KNO WLEDGE WEAL TH EDITORIAL STUDENT HOUSING Tap into this IMPROVING PUBLISHER Neale Petersen growing market KITCHEN YOUR EDITOR Angelique Redmond MARCH Cover Guide SPOTLIGHT ON JHB breaking Without DESIGN STUDIO Michelle Alexander, James Clark Will crime keep the the bank CBD empty? & Brent Fisher Page 14 Become Tomorrow’s Millionaire CONTRIBUTORS Monique Terrazas, Jonathan www.reimag.co.za Become Tomorrow’s Courtwell, Koos du Toit, Angie Redmond, John Page 30 Student Housing Property Millionaire Roberts, Scott Picken, Iselle McCalman. Page 32 Improving Your Kitchen With real-life investment advice PHOTOGRAPHY Stock Exchange, Dreamstime Page 44 Spotlight On JHB TRAFFIC Juanita Heilbron write to us: Page 10 Master Investor Jonathan Broll MARCH 2013 March 2013 0 3 0 4 4 R50.00 (Incl. VAT) R43.00 Other Countries [email protected] Z 9 771995 655001 MASTER INVESTOR JONATHAN BROLL www.reimag.co.za FINANCIAL MANAGER Marisa George WEBSITE Diamatrix WEB ADMINISTRATOR Russell Bennett ADVERTISING FEATURES National Russell Krynauw [email protected] Roy Lategan [email protected] 5 INVESTOR TALK Andre Evans [email protected] We Can Make A Diference Material & Trafc 6 BOOK REVIEWS Juanita Heilbron [email protected] Whats New In March to advertise: 8 INBOX 021 674 5026 Ask The Property Experts Buy-to-let property CIRCULATION 10 MASTER INVESTOR JONATHAN BROLL DISTRIBUTION On The Dot Distribution Be Tenacious And Never Give Up PRINTING SED Printing Solutions 14 COVER STORY to subscribe: Ensure Your Success 0861 228 669 With lessons from real-life investors [email protected] 20 CASE STUDIES The Good, Bad & Ugly SUBSCRIPTION RATES: R450 - 1 year ; R 900 - 2 years PUBLISHED BY REALE MEDIA Neale Petersen (CEO), B.Taylor RESIDENTIAL 26 STRATEGIES ALSO PUBLISHED BY REIM Property Investment 28 SMART MOVES SOUTH AFRICAN REAL ESTATE INVESTOR MAGAZINE Feel The Pulse Of The Property Industry Where is South Africa heading? Buy-To-Let Your Tenant Could Sue You! LISTED PROPERTY www.reimag.co.za Are You Missing The Fireworks? 7 Deadly Too good to be true? Sins Of Property Investment July 2012 R39.95 (Incl. VAT) R35.04 (Exclu. VAT) Other countries JULY 2012 The New Land Rover Z www.reimag.co.za Evoque Reviewed MASTER INVESTOR DOLF DE ROOS 30 GETTING STARTED Autumn 2012 Autumn 2012 JUST PROPERTY MAGAZINE PROPERTY Student Housing OFFSHORE 2012 2012 2012 MAGAZINE Rental Income PROPERTY HANDBOOK your absolute look into the world of real estate Security Challenges can be overcome The Commercial Property Market Where to this year? Holiday Homes 32 IMPROVING A wise nancial decision? www.justpropertygroup.co.za A wise nancial decision? R 99.95 (EXL VAT) BROUGHT TO YOU BY: EDITION 3• 2012 ISSUE Add Value To Your Kitchen 2 Autumn 2012 www.justpropertygroup.co.za Without breaking the bank www.reimag.co.za 36 SMART MOVES All rights reserved. No portion of this publication Home Insurance may be reproduced or used in any form without prior written consent and permission from Real Estate A small price to pay for peace of mind Media. The publisher gives no written guarantees or assurances and makes no representation regarding any goods or services written or advertised within this edition. Prospective investors should always consult their attorneys, advisors or accountants. Copyright © Real Estate Media cc www.reimag.co.za March 2013 SA Real Estate INVESTOR 1
INDEX COMMERCIAL ABC 41 COMMERCIAL INVESTOR AENGUS PROPERTIES ........................................................ 23 News And Industry Update AFRISKI ................................................................................... 63 Updates and property hear say APARTMENT THERAPY ...................................................... 69 AMA ARCHITECTS ............................................................... 70 AMA ARCHITECTS ............................................................... 71 42 SMART MOVES BLACK PEPPER ..................................................................... 08 Spotlight On JHB COURTWELL CONSULTING .............................................. 49 Will the CBD regain popularity? CYPRIOT ................................................................................. 59 CITIZON .................................................................................. 73 48 DEVELOPMENTS COBRA TAPS.......................................................................... 0BC Town Planning And DEF Environmental Surveys ENGEL & VOLKERS .............................................................. 23 EIGHTY EIGHT POCKETS ................................................... 24 50 LISTED ELEPHANT POINT ................................................................ 51 2013 Will Be An Eventful Year FINANCIAL INTELLEGENCE .............................................. 03 FIRESTAY ................................................................................ 31 FRASER 4 PR .......................................................................... 46 52 HOSPITALITY Rural Tourism GHI GRINDROD ASSET............................................................... 58 GLOBAL PROPERTY GUIDE .............................................. 62 IHFM ........................................................................................ 38 OFFSHORE IPS INVEST ............................................................................. 58 GRINDROD ASSET............................................................... 58 55 OFFSHORE INVESTOR News And Industry Update JKL Updates and property hear say JUST PROPERTY GROUP ................................................... 34 JUST LETTING ....................................................................... 35 JUST PROPERTY GROUP ................................................... 37 56 OFFSHORE INVESTMENT JHI PROPERTIES ................................................................... 41 Buying Trips JONES LANG LASALLE ...................................................... 55 KNIGHT FRANK ANNE PORTER....................................... 22 60 LONDON KORBITEC ............................................................................... 41 London’s Changing Demographics LIGHTSTONE ......................................................................... 22 LET & STAY ............................................................................. 31 LIGHTSTONE ......................................................................... 46 62 FINANCE Median Property Prices MNO NATIONWIDE ........................................................................ 09 NAPD ....................................................................................... 47 NICOR ...................................................................................... 75 OOBA ...................................................................................... 23 PROPERTY FRONTIER ........................................................ 35 LIFESTYLE OOBA ...................................................................................... 23 PQR 66 PROPERTY MONITOR PROPERTY FRONTIER ........................................................ 25 Live Like A Princess P3 POROPERTY GROUP .................................................... 26 P3 INVESTMENT GROUP ................................................... 27 68 DECOR P3 INVESTMENT GROUP ................................................... 28 Get Colouful PRIVATE STUDENT ACCOMODATION ........................... 31 PADDOCKS ............................................................................ 38 PARAGON LENDING ........................................................... 41 70 DESIGN PROPWEALTH ....................................................................... 55 Architecture - Embracing The World REMAX .................................................................................... 08 RAWSON ................................................................................ 13 72 MOTOR TALK RAWSON ................................................................................ 23 2013 Year Of The Hybrid Hypercar RAINMAKER MARKETING ................................................. 53 STUVWYZ 74 TECH TALK SMART VILLAGE ................................................................... 21 Clash Of The Giants SED ........................................................................................... 07 YDL........................................................................................... 57 STUDENT ACCOMODATION ............................................ 31 SHONA LANGA .................................................................... 39 SA COUNCIL OF SHOPPING CENTRES ......................... 41 Jonathan Smith is the Koos du Toit is the CEO Contributors Director of Courtwell of P3 Investment Group STANLIB .................................................................................. 54 SMUTS AND TAYLOR .......................................................... 61 Consulting and has ex- tensive experience in that ofers hope and Olga Koma is a researcher TPN .......................................................................................... 04 guidance to anyone property and consulting, looking to build a with FinMark Trust’ Centre for Mike Smuts is an including educational successful investment Afordable Housing Finance in TPN STATS .............................................................................. 29 programs author, and property portfolio. Africa. Her interests are urban TRADE & INDUSTRY MINISTER ....................................... 55 investor, he is the studies, urban design & African owner and managing cities discourse. director of Smuts and Taylor, a London based investment frm Rui Marto is the Director John Roberts is the CEO of of Marto Laftte & Assoc, a The Just Property Group, a Monique Terrazas is REIMS frm specializing in Property dynamic property company Angelique Redmond is 2012 SAPOA award winning Law Commercial Law, born from the motivation to our talented editor. With property investment writer, Foreclosures, Civil Litigation create a property industry a passion for words and she is a treasured REIM and Consumer Law. leader music, her pink earphones contributor for almost are a permanent fxture. fve years. 2 2 2 March 2013 SA Real Estate Investor www.reimag.co.za
FINANCIAL INTELLIGENCE CENTRE ACT ADVERTORIAL Is your business assisting in combating financial crime? riminals derive profit through illegal that your firm accounts to another regulatory must be submitted if you regard a transaction as in activities, such as the sale of banned body – the Estate Agency Affairs Board (EAAB) – some way suspicious or unusual in comparison with C drugs, counterfeit goods, the traffcking which is responsible for the enforcement of various normal business practice. This report is also fled of women and children, and other illegal activities. compliance requirements, including the terms of the via the FIC website Criminals use the country’s financial transaction FIC Act. c.A terror property report must be submitted via system to launder their illegal profts through various the FIC website if you hold property on behalf of businesses and so make the profts appear legal. The obligations of an accountable institution someone who may have been involved in carrying (in this instance, estate agents) out terrorist activities. Your business could be used in these are summarised below: types of illegal activities These reports assist the FIC in identifying 1 You must register your frm with the FIC. This transactions in which there may have been an To prevent this from happening and to help turn your should be done online via the FIC’s website: attempt to launder the proceeds of crime. business into a partner in the fght against crime, you www.fc.gov.za should ensure that your business complies with the A manual process for registering is also available 5 You must introduce certain measures in your requirements of the Financial Intelligence Centre Act – contact the FIC should you wish to go this route. business to promote compliance with the FIC Act No. 38 of 2001 (the FIC Act), as amended. within the business. You will be asked to provide the details of a Estate agents have been identified as being representative of the business; it is best to list the You can access more information on the FIC Act, susceptible to abuse by criminals wishing to launder person who will be responsible for reports you are relevant Regulations and guidance, including the proceeds of their criminal activities, often required to submit to the FIC. (See below for more Public Compliance Communication 08 and Public referred to as ‘dirty money’. An example of this is information about the reports.) Compliance Communication 10 which relate to where a drug dealer buys a property for cash. The matters affecting estate agents, at www.fc.gov.za funds may have been acquired illegally but, if he 2 You have a duty to identify your clients later resells the property, then the funds he receives on the sale appear to be legal because he has 3 You have a duty to keep records relating to your carried out a legal transaction by selling immovable clients and to the transactions carried out with them For more information on registering property through legal channels. your business with the FIC, 4 You must provide reports to the FIC in the event contact us via e-mail at Compliance with the provisions of the FIC Act can of these types of situations occurring: [email protected] help to ensure that your business does not play any a. Any cash transactions of R25 000 or more or phone 0860 222 200 part in the laundering of money or the fnancing of b.A suspicious and unusual transaction report terrorism. Obligations of estate agents in terms of the FIC Act Estate agents are categorised as accountable institutions in terms of the FIC Act. This means
INVESTOR TALK BY ANGIE REDMOND elcome to the frst edition of REImag with myself as the editor. With Neale stepping away to focus Won the business and to grow the company, I have taken on the mantle of ensuring that the same engaging and informative content you have come to expect continues to be delivered to you every month. However, this year we aim to engage YOU, the reader, we want to hear your stories, your thoughts and your opinions about the property market. So, visit our Facebook or Twitter page and let us know what’s on your mind, or email me at [email protected] and help me shape the magazine YOU want to read. With all the doom and gloom in the news and the constant reports of corruption and fraud, it is hard to remain positive when thinking about investing in South Africa. However, remember that for every horror story, there are three success stories. South Africans are proving that we can and will make a diference. Te recent Constitutional Court case regarding the boycotting of municipal rates is just one example. It raises a very relevant question: What options are available to taxpayers who are not receiving the services they are paying for? Should they turn to ‘street justice’ as it’s being called or can they refuse to pay the property rates portion of their municipality account? While judgment was reserved, the case is an important step in raising awareness of service delivery problems in South Africa, problems which demand answers and change. Given the uncertain economic conditions locally and globally, some institutions predict modest growth and others suggest caution. It is time to be innovative when investing. Tere are many opportunities to invest in property in South Africa and to create wealth, but they may not be obvious – some out-of-the-box thinking is required. In this edition we look at some of these out-of-the-box investment ideas and how you can get involved. Our cover story this edition focuses on you, the investor, highlighting the strategies that have worked for other real life property investors. In every issue, we also provide some great advice to increase the value of your property with smart home improvements. So without further ado, let’s start your investment journey. Angelique Redmond EDITOR “Do not worry if you have built your castles in the air. They are where they should be. Now put the foundations under them.” Henry David Thoreau www.reimag.co.za March 2013 SA Real Estate INVESTOR 5
BOOK REVIEWS The 10-Step Stress Solution A Survival Guide For Life By Neil Shah By Bear Grylls A fantastic 10-step plan with Bear Grylls’ Survival Guide simple and practical solutions for Life is packed with stories for reducing your stress levels from Bear’s adventures and so you can manage your life SAS training that are thrilling, and breathe a sigh of relief. emotional and revealing. Find out how to: By showing the reader how he • Manage your time – at work has dealt with setbacks and and at home. seemingly insurmountable • Regain your balance and lift obstacles, Bear helps readers your mood. plot a better course towards their • Improve your concentration dreams. and motivation. This is not a self-help book in • Get a good night’s sleep and the traditional sense, nor is it a stop worrying. manual. Churchill in His Own Words Makers By Richard M. Langworth By Chris Anderson Churchill in His Own Words, If a country wants to remain which is fully authorised economically vibrant, it needs by the Churchill Estate, is to manufacture things. In a defnitive collection of recent years, many nations Churchill’s words, thematically have become obsessed with arranged. It also highlights the making money out of selling myriad quotations commonly services, leaving the real misattributed to Churchill. business of manufacturing A rich and valuable portrait to others. Makers is about of Winston Churchill and how all that is being reversed. his age, in the great man’s It t a k e s a look at how own words. manufacturing is increasing it’s participation in everything digital. The Cubicle Manifesto A Good African Story By Mainak Dhar By Andrew Rugasira Welcome to THE CUBICLE. Te inspirational story of how an Te desk space you occupy for African-owned cofee company hours on end. Where creativity became a proftable global brand. is dead and stress levels are Since it was founded in 2003, high. Where you feel guilty for Good African Cofee has helped leaving, but reluctant to arrive. thousands of farmers earn a Where you eat lunch, plan, decent living, send their children strategize and phone home to to school and escape a spiral of say how late you’ll be tonight. debt and dependence. In A Good Is this the place you’d really like African Story, Andrew Rugasira to be? Te Cubicle Manifesto argues that trade has achieved is a business parable for the modern what years of aid failed to deliver, age that will transform the way you and has provided a tantalising work. Join the revolution. glimpse of what Africa could be. BOOKS AVAILABLE AT www.thebizmall.co.za Knowledge Is Money www.reimag.co.za.reimag.co.za 6 6 M www March 2013 SA Real Estate Investor arch 2013 SA Real Estate Investor
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INBOX ASK THE PROPERTY EXPERTS INBOX Purchase Price In London Best Area For Capital Growth Commercial Property Mike Smuts Adrian Goslett, Simon Black Smuts and Taylor RE/MAX Black Pepper Online www.smutsandtaylor.com www.remax.co.za www.blackpepperonline.co.za Q Debby Young asks: Q James Carroll asks: Q Nicole Heur asks: I want to purchase property in London and I I want to start investing in buy-to-let property, If I want to invest in commercial property would like to know what costs, apart from the but how do I pick the best area for capital growth? which type of property should I look at purchase price, I will need to pay. What factors should I consider before I buy? investing in for a long-term investment? What sector has a demand that an investor would proft from? A Mike Smuts answers: A Adrian Goslett replies: A Simon Black responds: Just as when you buy a property in SA, you’ll When looking to purchase a rental property, Firstly, we would need to establish an amount encounter a number of fees and costs over and it is important to take your time and do your of money available for investment. In most above the purchase price when you buy in research to ensure you buy a property that suits cases commercial property funding loans are London. Te total fees (also called completion your needs perfectly and an experienced estate issued on a 10 year bond term, which can prove costs) payable when you buy a house in the UK agent will be able to help you in this regard. It expensive for individual investors. The value are among the lowest in the world, and total is imperative to gather as much information as of the investment coupled with the investor’s between 3% and 5% for a property below possible, because when it comes to buying or unique appetite to manage these assets will £250 000. Most fees are calculated as a renting property. determine which property type is most suitable, percentage of the cost of a property. So, the Te area in which the property is located will whether it be retail, ofce or industrial. more expensive your investment property, the have an infuence on the rental income it can Things to look out for when shopping for higher the fees you will need to pay. As a South generate. For example, neighbourhoods that property assets are opportunities possessing the African investor buying a property in London, are close to amenities such as schools and following attributes: you will be faced with the following fees, so be shopping centres will generally fetch a higher • Te owner’s ability to re-tenant on lease sure to include these in your budget: price. If you are unfamiliar with a development termination, • stamp duty land tax; or neighbourhood, it would help to speak to • Where long-term leases are possible or in • solicitor’s or licenced conveyancer’s fees; tenants that are currently renting and living place, • local authority search fees; there, as they will be invaluable in providing • Where assets are in good condition and / or • other search fees and disbursements; you with important information on the area. require low maintenance, • land registry fees; Find out the average rental paid by tenants in • Redevelopment opportunities where • valuation fees; the area. Tis will help you to estimate what you improvements lead to increased rental yields, • survey fees; can expect to earn from your rental property • Good locations or taking a view on up and • mortgage arrangement or acceptance fees; each month and whether or not it is a viable coming nodes, • mortgage broker’s fees; and option. • Suitability to specifc operations / or • buildings insurance fees. alternatively generic features for easy use. Do you have a property question you would like answered by our experts? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] 8 March 2013 SA Real Estate Investor www.reimag.co.za
Stay faithful to your dreams Breathe a sig h o f relief [email protected] 0861 66 66 76
MASTER INVESTOR BY NEALE PETERSEN ‘Meeting Other People’s Needs, Ensures Your Own Success’ Be tenacious, competitive and never give up 10 March 2013 SA Real Estate Investor www.reimag.co.za
FEATURES onathan Broll is the non-executive But he took immediate action and in the chairman of Broll Property Group, one following month, January 1975, he opened Jof South Africa’s largest independent the doors of Broll Property Group, starting property services providers. Jonathan out in residential property management as prefers to keep the incredible success of his a rent collection agency in the lower income company low key and attributes this success areas in Cape Town, such as Brooklyn, to the people he is surrounded by, the sound Rugby, Ysterplaat and Woodstock, as well as relationships he has established and calculated other areas established property management risks taken along the way. He has seen five companies avoided. He learnt the hard yards booms and busts in the property cycle and of property management from door knocking major political upheavals, yet he has always and collecting rent. He gradually advanced to JONATHAN BROLL remained optimistic about South Africa and take on and manage Broll’s frst commercial Africa’s prospects. building and expanded into ofce leasing. In Personal Statistics mid-1976, business came to a virtual standstill Age: 65 Jonathan built up his company through for six months in the wake of the Soweto riots. Qualifcations/Experience: CA (SA) steady growth. Today, Broll employs more FRICS than 1 000 skilled property practitioners in Fortunately, unlike most property companies Marital status: Married to Idia South Africa and more than 200 people in that focused on the transaction (broking) side (for 41 years) with 4 children and 9 West Africa, managing a R62 billion property of the business, Broll’s focus was on property grandchildren portfolio comprising of some 14 000 leases. management. Broll has grown signifcantly from its humble Close-up beginnings and has also expanded into a wide Tis focus provided a solid, stable foundation spectrum of property services. Broll now ofers and an annuity income. Jonathan believes it Mentors: Jonathan’s early property clients were experienced and very property and utilities management; shopping was the right decision for the company to demanding. Learning how to meet centre management; retail, commercial and follow that route at the time, as Broll grew their high standards and expecta- industrial leasing; investment sales; corporate stronger and stronger month by month. tions helped him raise the bar. Yet real estate services and valuations. he remains grounded in terms of his “Today, Broll employs more than 1 000 achievements. He has always valued independence, including owning skilled property practitioners in South his own business. He likes to interact with strong people who have difer- Africa and more than 200 people in ent opinions and are not scared to voice them, and prides himself on his West Africa” fexibility and ability to change his mind when presented with a valid argument. Jonathan believes that he has been fortunate in assembling a quality team of people, who com- Jonathan is a proud born-and-bred Jonathan recalls that when he started the bined their eforts to create a strong Capetonian. During this time he studied business 38 years ago, there were few systems corporate culture based on integrity part-time at UCT and qualified as a in place to support them - no computers, and to deliver service excellence. This Chartered Accountant (CA). Discovering no copiers, no fax machines - just an IBM has been the foundation for the suc- that accounting did not suit his personality typewriter. Nevertheless, Broll built on a cess of the business. and ambitions, Jonathan started working for strong base in Cape Town and gradually Books: Jonathan enjoys reading Camelot, a small property company in Sea grew the business into new areas of expertise. history and biographies, but the book Point, which specialised in selling property In 1983, Alan Wallace joined Jonathan and that had the biggest impact on him is investments and sectional title blocks of expanded the business into the transaction Dr Anton Rupert’s biography, which taught him that we can learn from flats. Soon afterwards he joined Herbert business. They took on more institutional our mistakes. Penny, another property company, for a short clients and placed a strong emphasis on Motto: Make a mark in your life, take stint before taking up his last job in June systems, developing customised computer a risk, be courageous! 1974 with Robert Katz, a large construction systems which they have been improving company, where he managed their portfolio continuously for 27 years. Today, Broll’s of properties. When the company collapsed in management systems are ISO certified and December of the same year, Jonathan - now four software developers continue to update 27 and married with one child - found himself and fne-tune the systems. unemployed. www.reimag.co.za March 2013 SA Real Estate INVESTOR 11
MASTER INVESTOR National footprint closely with its clients, growing with them “Jonathan About 26 years ago, one of Broll’s biggest into Africa, and also leading the way for a institutional clients, Allan Gray, bought a number of retailers to expand into the rest of believes that if you building in Johannesburg. This motivated the continent. He believes this is in part due to train people well Broll to open their frst ofce in Johannesburg, the fact that they don’t staf the business with which is now the head ofce of Broll. Serving expats, but rather employ local people who and delegate some of South Africa’s largest listed property are well-educated and have an excellent work portfolios, Broll now has nine regional ofces ethic. in South Africa. properly, team Broll aims to remain the market leader into Broll and CB Richard Ellis entered into Africa and believes that in the future, more members often an affiliation agreement in 2004 and Broll than half of its business will be derived from continues to represent this global giant across Africa beyond South Africa’s borders. exceed sub-Saharan Africa. Tis association with the It’s about the people expectations” world’s largest property services company has enabled unequalled international connections Te company’s growth, according to Jonathan, and access to best practice and cutting edge was achieved through commitment to their systems in line with global benchmarks. clients, service excellence and maximising the property potential – abiding by an ethos Jonathan believes that if you train people well Broll is committed to BEE on the ownership of managing properties as though it belonged and delegate properly, team members often front. Akhona Nalapha Investments, a to Broll and its highly trained and experienced exceed expectations. For this reason, the Broll black women-owned property company, is a team of property specialists. team consists of specialists who are authorised signifcant shareholder of the company, along to run the business and who are trusted by with Catalyst. In 2002, with the aim of improving the skills management to make the right decisions, of Broll staff members, the Broll Academy which they invariably do. The introduction of Catalyst was established - the frst of its kind providing Broll itself does not invest in property, but in-house training for employees in the Now, at age 65, Jonathan believes he can established Catalyst as a group company to commercial, retail and industrial property add value by sharing his knowledge and provide property investment and property sectors. Most employees who have completed experiences in the business, providing strategic development services. Catalyst has built up a Academy courses are from previously guidance and contributing to new goals and signifcant private property portfolio over the disadvantaged backgrounds. The training objectives. Looking back at his life, Jonathan is last 14 years. Catalyst Fund Managers, which has helped them improve performance and certain that he has no regrets about any of the invests in the listed property sector on behalf of advance their careers within the Group. things that he has done. And he is courageous institutional clients. Tey currently have R9.5 Broll has also introduced two new training and bold in his quest to ensure he will never billion in funds under management, as well programmes – internships and learnerships to regret things he had not done. as a global real estate fund in Guernsey. Tis develop skills within the company and within RESOURCES global real estate fund has been Morning Star the industry. rating agency as the best overall worldwide www.broll.co.za www.catalyst.co.za performance in this sector for the past 3 years. African growth JONATHAN’S ADVICE FOR PROPERTY INVESTORS Today, Broll Property Group’s strategy is to become pan-African. Broll Property Group 1 Property investment is one of the best wealth creation strategies. has fully fedged operations in Ghana, Malawi, Namibia and Nigeria and provides services in a 2 Rent is the best form of income. 3 Gear Other People’s Money (OPM) to enhance return, but gear prudently, not recklessly. number of other countries, including Angola, Botswana, Kenya and Zambia. Services across 4 Africa include property management, broking Know the local market and understand value. and leasing. Broll´s portfolio of property under management outside of South Africa is valued 5 Be persistent. 6 Buy well and sell well. in excess of R6 billion. Future plans include opening offices in Zimbabwe, Rwanda and 7 Mauritius. Choose an area of specialisation, whether residential, ofce, industrial or retail. 8 Understand the past, know the present, but realise the future is always unknown. Jonathan’s experience in Africa has been very positive. He says that Broll has worked www.reimag.co.za.reimag.co.za 12 12 12 March 2013 SA Real Estate Investor www
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COVER STORY BY MONIQUE TERRAZAS Ensure Your Success With lessons from real-life investors ost people assume that successful as the specialised profession that it is. Buy- investment is based on solid fundamentals and property investors are those who to-let property investors play a crucial role simple but smart investment principles. Mwere born into wealthy families, in providing housing to millions of South Meet the entrants have the right connections or simply got lucky. Africans, who cannot or do not want to buy Te reality is quite diferent, judging from the their own properties, whether that is because entries we received for the frst annual Real they require temporary accommodation or The entrants into the Real Estate Investor Estate Investor of the Year competition. because they cannot obtain bond fnance due of the Year competition could not be more Te entrants are all ordinary South Africans, to the banks’ strict lending requirements. diverse in terms of demographics, and their who have built up small, medium and large, Particularly in a country with a massive property portfolios – in terms of size, types of but profitable, portfolios of properties with housing backlog, such as South Africa, buy- properties and the strategies employed - could little more than sheer dedication, common to-let property investors are essential to not be more varied. However, a number of sense and hard work. ensure the supply to meet the demand for striking similarities are also evident, including Not only are these real-life investors a source rental properties. Te Real Estate Investor of a strong emphasis on ethics and philanthropy, of inspiration, they are also trailblazers who the Year competition aims to recognise this as well as a general consensus that if they had light the way for those of us who have not yet crucial role that buy-to-let property investors an opportunity to do it all over again, they bought that frst investment property, or the fulfl in the economy and to acknowledge buy- would have bought more properties. next one. to-let property investment as a specialised Ranging in age from their late-thirties to Why a Real Estate Investor of the profession. early-ffties, the entrants came from all races, Year competition? The competition also aims to promote cultures and backgrounds. Tey are male and professionalism in the buy-to-let property female, as well as couples working together. It is an unfortunate reality that buy-to-let investment industry, creating awareness of Some have impressive formal qualifcations property investment has yet to be recognised the fact that successful buy-to-let property while others have succeeded without any 14 March 2013 SA Real Estate Investor www.reimag.co.za
FEATURES Property selection criteria formal education. Some started out as low- with two, three and even four units, semi- wage labourers while others learnt about houses or garden cottages. property investment from their parents. Te Te consensus seems to be that residential The property selection criteria used by our entrants also work in a range of industries, properties are the easiest to manage, and investors differ widely too. Some prefer from medical professionals and estate agents provide scope to renovate and bring to bear sectional title units in new developments to to small business owners and micro-business property management expertise to increase avoid paying transfer and other costs out- owners, making a living from selling airtime potential income, by for example, adding more of-pocket, while others avoid complexes, and chickens. rooms or a garage. citing poor workmanship and too much Nevertheless, a number of investors rental competition. Some investors look for The property portfolios owned entire blocks of fats and townhouse neglected and even vandalised properties to complexes. Others have already branched pick up at a bargain price, renovate and rent Tere is no correlation between any of these out into the commercial property sector, out, while other have fixed and flipped as demographic variables and the size or success investing in office complexes, small retail many as 70 properties allowing them to build of the property portfolios, which range properties, industrial stands and workshops. It up signifcant investment capital. from five entry-level residential properties is interesting that in the portfolios containing A number focus solely on properties that are to portfolios consisting of 68 properties, commercial properties, the focus was also cash fow positive, while yet others are willing including residential, small retail and medium on the lower end of the market, with rental to subsidise a shortfall for a few years to obtain industrial properties, as well as office park properties aimed at small and medium-sized a quality property. Most of the investors units. owner-operated businesses and industrial believe that income generating potential is far A striking common factor is the success of properties catering for start-up and small more important than capital growth, and that the various property portfolios, regardless of businesses. investing for the long-term – beneftting from size and composition. As just one example, one both passive income and capital growth - is Areas property portfolio consisting of 30 residential the best approach. properties is generating an ongoing, infation- Our investors also use a range of strategies linked passive income of R400 000 a month! Just as diverse as the types of properties and to select the right properties. Some like to the investors themselves, are the areas in drive around an area to keep up to date with “Not only are these which our investors focus. Tis confrms that what’s available, others use the Internet and real-life investors a source the buy-to-let property investment model newspapers, while others have a professional works in any area. Most of the entrants focus of inspiration, they are also on a specific area, notably Boksburg, trailblazers who light the Kempton Park and Benoni on the East Rand. The investors tend to way for those of us who own multiple properties in a specifc have not yet bought that town or city, noting that they prefer to focus on an area they know, frst investment property, in which they are familiar or the next one.” with property values and conditions, and from where they can keep an eye on their investments. Nevertheless, Types of properties there are some investors who have portfolios that are While the majority of the entrants invest in widely spread across the residential property, the properties vary widely country, from Mpumalanga from one-bed cottages to four-bedroom to Gauteng and the Western homes. Te most popular properties are one Cape. and two-bedroom entry-level units in security While most investors prefer complexes which, as one entrant explained: to invest in close proximity to “limits risk because of permanent occupation home, all agreed that the most due to affordability and guarantees return important factor is the location on investment”. Rental properties for lower- in relation to amenities: medical income tenants, catering for the R2 500 per facilities, police stations, month to R4 500 per month rental bracket, schools, shopping centres as also featured strongly. well as easy access to main Some investors focus on multi-income transport routes and public producing properties, by selecting properties transport. 15 15 www www.reimag.co.za.reimag.co.za March 2013 SA Real Estate INVESTOR 15
COVER STORY team of estate agents or property investment What is clear is that our investors have spent only appreciate in value, but will also generate groups always on the lookout for great time and effort to find professionals who are ongoing income. opportunities. honest and trustworthy and have built up solid How our investors started Our investors are very thorough and patient relationships with them. in their search for just the right property, doing A number of them continue to rely on the thorough due diligence and research. Some expertise and experience of property investment Not a single one of our investors started with study reports like Lightstone and WinDeed experts. Names that cropped up repeatedly anything more than guts, sheer hard work and to establish the true value of a property. Tey included Gordon Mackay, P3 Investment determination. conduct thorough investigations of the property Group and IPS. One of the entrants tells of how he and his and check the fnancial statements of the body wife held fve jobs between the two of them in corporate and determine the rental, before their quest to save up a deposit for their frst making an ofer. “A common trait among property. Another explains how he held down our investors is ongoing A number of the entrants also highlighted multiple jobs while living with his parents, the importance of selecting properties using which allowed him to acquire rental properties. common sense, not emotion. They apply a research and a quest for He also added rooms to his parents’ house to knowledge.” business-like approach considering the fnancial let out for additional income. Another investor vitality, including a yield above inflation, tells us that their frst investment was also their the condition of the property to ensure low main residence, half of which they rented out to maintenance, as well as the location in terms of pay of the bond in record time. Capital investment proximity to schools, shopping malls and main Others started their own businesses and, transport routes. realising they were paying too much rental for Another striking similarity among the entrants the business premises, began investigating the Research and knowledge is the fact that they have all built their portfolios possibility of becoming landlords. Some simply with minimal investment of their own stumbled upon property investment by chance. A common trait among our investors is ongoing capital, obtaining bonds for all their property For one investor, his property portfolio started research and a quest for knowledge. Some have acquisitions. Most mention that it is only with an act of good-heartedness: “I bought my spent years researching personal financial recently, due to the banks’ strict lending criteria, second property – a two-bed fat in Arcadia, management and investment strategies, while that they are investing their own capital to Pretoria - because my girlfriend at the time, she others have invested a great deal of time and cover the required deposits. Tey are, however, is now my wife, was ill-treated by her landlord money to attend seminars, read books, do all quick to point out that they consider this a and needed a place to stay. When I later sold research and apply their knowledge in practice. sound and worthwhile investment they are the property and made R100 000 profit, the Support structure absolutely happy to make. estate agent asked if I was buying and selling It is telling that almost all the entrants A number of entrants reported proudly that for investment – a question that changed have support structures in place, ranging they have made the all-important mind shift my life. My journey of property investment from mentors to full teams of property from being conservative and avoiding any debt, intensifed from there.” professionals to assist them. These teams, in to being smart and using as much “good” debt Why property? most cases, include an estate agent, attorney as possible, without over-gearing. “Good” and rental agent, but in some cases also debt, our entrants agree, is the kind of debt include maintenance teams and auditors. that allows them to acquire assets that will not Many of the entrants are completely and utterly convinced that buy-to-let property investment is the way to create wealth. Many of them have already secured their retirement, bringing them unmatched peace of mind. But they love property for many other reasons. “It is the easiest business to start - it does not conflict with my full-time job and requires little time to manage,” comments one investor. Another adds: “Property investment allows me to use other people’s money and time, making it the easiest and most afordable way to invest.” Others mention perks such as doing something that is fun and that they love to do, the incredible power of passive income, and the ability to leave a legacy through a properly structured property portfolio. It is easy to understand why our investors are 16 March 2013 SA Real Estate Investor www.reimag.co.za
FEATURES so excited about property investment when you read some of the stories. • “I bought our second property for R119 000 and sold it for R720 000 14 years later, during which period we enjoyed living there, paying of the bond in a few years, which allowed us to invest in our frst rental property.” • “We bought a two-bedroom townhouse with a double garage in a security complex directly from the developer – with all costs included - for R200 000 in 2001. It was recently valuated at R690 000.” • “In 2008, I bought a property in Bezuidenhout Valley, Johannesburg with a R250 000 cash deposit and an agreement to pay the remaining R400 000 of the purchase price of R 650 000 in instalments over five years, which meant • “Te value of our property portfolio is rapidly Philanthropy no bond was required. However, the owner catching up with the value of our business.” needed R200 000 urgently, but could not obtain Other investments fnance. Another common trait among the entrants So I took out a personal loan of R100 000 was philanthropy. The majority of entrants and offered her another R100 000 which I Most of the investors focus on their property are not only supporting their children, but portfolios, for obvious reasons, considering also care for their elderly parents. Many are their experiences detailed above. However, supporting extended family members as well “Good debt, our a few are also invested in, for example, listed as their domestic workers and their families. property on the JSE. The majority of the They are also involved in community work, entrants agree, is the investors mentioned their disappointment with support numerous charities and help other kind of debt that allows the performance of other investments. entrepreneurs to establish businesses. They are passionate about teaching their children “When we started out at frst, I took advice them to acquire assets from a fnancial adviser - not an independent and others in the community about the power that will not only fnancial planner - who did not have our best of property investment as a means of creating interests, but rather his commission earnings, at wealth. appreciate in value, but heart,” noted one of the entrants. “I realised this will also generate after 10 years and it cost us about R800 000 to Entrepreneurial fair R1 million in lost capital growth. I rectifed the ongoing income.” situation by taking complete ownership of the Many of our investors are entrepreneurs, situation by conducting our own investments not only as owners of small businesses, but and since then I turned around the losses into also, even while working in the corporate excess of what we lost.” environment, as owners of income-generating had available in cash. The owner was happy Tis experience is echoed by other entrants, property portfolios. As one entrant says: “You to accept the R200 000 in cash as full and one of which commented: “We bought need to be creative in this game, you always fnal payment for the property, which meant I insurance annuities and invested in five-year need to come up with ideas as to how you can acquired a property worth R800 000 for R450 plans, which all had a negative growth. We lost maximize your income”. 000, while helping someone in dire need. I am quite some money on insurance.” Tis inspiring story illustrates: “I have a semi- collecting R23 000 a month rental from this house in Johannesburg which I rented out to Ethics property every month.” two families, collecting R3 500 per month • “We are comfortably on our way to owning 15 from each, which covered the bond of R6 properties within the next fve years.” All of the entrants placed emphasis on ethical 500. Ten I did some research and discovered • “Today I own 16 sixteen rental properties, of investment. Tis ethical approach ranges from that most people in the area need rooms. So which only two are bonded, as well as a paid up paying taxes and complying with legislation in I decided to renovate and created beautiful main residence.” terms of managing tenants to dealing only with rooms with bathrooms and arranged alternative • “I bought a vacant stand for R100 000 and sold legitimate and legally registered organisations accommodation for the existing tenants. Now it a year later for R1.5 million. I also bought a and making fair ofers on properties, based on I am collecting R19 000 a month in rental! By retail complex with fats on the frst foor for a due diligence, even if the seller is distressed and being creative I have managed to accommodate minimal amount, fxed it and today it is worth desperate. As one entrant put it so succinctly more people, I have employed two full-time more than R5 million.” “what goes around will come around”. caretakers for and provided work opportunities 17 17 www.reimag.co.za.reimag.co.za March 2013 SA Real Estate INVESTOR 17 www
COVER STORY for about eight people who also have families to worked very hard and had no rest - my wife ADVICE FROM REAL LIFE INVESTORS support and, most importantly, I have tripled used to complain that I don’t have time for her, my income.” even on Sundays. But now I have time for my Achieve fnancial freedom through Many others have created jobs, notably for family - we have Sunday lunches together - and 1 handymen and maintenance teams, as well as my future is brighter.” living modestly and investing wisely. administrative positions. A good number of entrants expressed peace 2 Only buy things if it can generate an For some, new business opportunities arose of mind that their retirement funding has been income. from their property investment, for example, secured. “We love the idea that even if we decide one investor has started his own boutique not to buy anymore properties, we will be well 3 If you look after the ten cents, the property management company. taken care of in our golden-oldie retirement ten rands will look after themselves. years,” says one entrant. “Investing in property 4 Get the knowledge through Lessons learnt has changed my life. I have no stress about my research, reading and attending future and my family’s future. I can now retire Tere seems to be solid consensus among the in ten years and will still be fnancially free,” seminars, workshops and events. 5 Knowledge is power and gives you investors that if they had a chance to change added another. anything in the way they built their property portfolios, it would have been buying more “There is nothing ever confdence to make good decisions. better than passive properties sooner. 6 Do thorough research and apply As one entrant so succinctly put it: “Tinking good common sense. income.” about the enormous capital growth we made on our frst properties and the fact that I cannot 7 Price, location and interested rates recall that they ever were without tenants, we A number of entrants report working less are all important but the most im- definitely should have been more aggressive while earning more, and some have been able portant factor is whether the prop- in our investment by buying more during to quit their jobs. “Tere is nothing ever better erty in a good investment which can 2001-2006, buying at least fve properties per than passive income,” enthuses one entrant. “I year. We would defnitely have invested more have quit my job to invest in property full time, generate a positive income within and earlier in fixed property which offers a with plenty of spare time for my family.” two to four years. guaranteed return in the long run and exploit More personal development has also resulted the market trends in our favour to speed up from the property investment journey. One of 8 Don’t overexpose self, keep reserves momentum.” the husband and wife teams reported that they for unexpected maintenance, vacan- “I would have bought more properties faster have learnt to think outside-the-box, a quantum cies etc. and would have been less conservative,” added leap from the “play it safe” mentality they grew 9 another. up with and that was further entrenched in the Always look for long-term value. But some lessons learnt are even more corporate world. Another entrant said that he 10 Don’t sell – buy more! valuable, as this entrant explained: “Most of discovered that he has good communication 11 Negotiate! us are of the opinion that we are born to be and negotiation skills. Yet another comments: average, above average or exceptional, poor, “Property investment has instilled confdence 12 Pay more than the minimum middle class or wealthy. Since investing in and discipline in me and awakened an appetite monthly bond instalment to reduce property we have learned to not be blinded for knowledge.” the interest payable and the term. by tradition but instead to always reach to the Starting your own journey 13 Pay the frst bond instalment the mo- next level. We became aware that opportunities and wealth are for everyone and not only for a ment the bond is granted to make a selected few. Te best part of it all is that it is not All the entrants in our Investor of the Year signifcant saving on interest. even difcult. With the necessary know how, competition are ordinary men and women who which is easily available in the times we live in, have discovered the power of property to create 14 Focus on the protection of your and with some efort and hard work, wealth is wealth by taking action. No one can become a assets by using trusts to acquire and within reach of everybody.” property investor without taking the action to hold investment properties. acquire that frst investment property, and then Property investment: changing lives the next one and the next one. 15 Build a support structure – a men- Many others are doing it successfully right tor, a team of specialists, or join a All of the entrants believed that property now, having started with no capital and no professional property investment investment has changed their lives – and for special skills or connections. Don’t wait another organisation. the better. Some of the often quoted chances day to join this group of inspiring people who included more money to help others, more time are not only securing their fnancial future, but 16 Property investment requires to spend with their families and doing what are also building a legacy of wealth that will patience, but your patience will be they love, for example, travelling. bring prosperity to generations to come. well-rewarded. “Before when I was in a cash business, I 18 March 2013 SA Real Estate Investor www.reimag.co.za
CASE STUDIES BY MONIQUE TERRAZAS Economic Growth Cannot Withstand More Protests The Good The Bad The Ugly Home Prices Going Up GDP Takes A Blow Securitising Loans Bill Rawson, Chairman of the Rawson Property South Africa’s economic growth is not strong While a court ruling in the US has, essentially, Group, recently drew attention to an article enough to withstand any further damaging declared the practise of securitising home loans published in the 12 January 2013 issue of Te events without serious consequences, according illegal, local banks securitise loans worth about Economist, which shows that South African to the latest BankservAfrica Economic R30 billion a month, according to the South home prices performed signifcantly better in Transaction Index (BETI), the broadest and African Banking Association’s website. 2012 than those of 85% of the world’s developed fastest indicator of broad economic activity in Banks securitise loans by bundling them countries. South Africa. together using a special purpose vehicle (SPV) South African homes increased in value by 5% Last year’s strikes overshadow any prospects and selling them to third party investors, who year-on-year in 2012. Only Hong Kong (21.8%) of 2013 being the year of an economic bounce- trade them on the capital markets. According and Austria (10.1%) performed better. Nine of back, says Mike Schüssler, chief economist to NewEra, an organisation campaigning for the 18 countries listed in the survey saw their at economists.co.za. And while the last three transparency in banking, banks are not upfront homes lose further value in 2012, the worst months of positive quarterly increases indicate on this issue. Te reason is that legally, once a being Spain (-9.3%), the Netherlands (-6.8%), a recession is not on the cards, stagnation in the bank securitises a loan, it loses all rights to the Ireland (-5.7%) and Italy (-4%). economy is continuing. asset. Tis means the bank cannot, for example, While South African home prices have risen Te BETI indicates that economic activity at repossess a property on which a loan has been by only 12.2% since the frst quarter of 2007, the start of 2013 is much slower than it was at securitised, because the bank no longer has any the local property market looks fairly stable in the start of 2012, which is likely to have a big rights to the property. Te implications of this comparison with the USA (-20.5%) and Japan impact on the rest of the year’s GDP growth rate. are staggering: thousands of homes may have (-14.2%) over the same period. “A slow start means that the rest of the year has been illegally repossessed by banks in South Slow growth (2.5%) has been predicted for to produce so much more to catch up for lost Africa. 2013, which means, in real terms, that South production in the beginning,” says Schüssler. The issue is already being tested in court. African homes will lose value in the coming Te BETI is currently only up by 1% relative According to a report in Business Report, year. But, says Rawson, although this may be to January 2012, making it the lowest year-on- foreclosure proceedings in the Western Cape true of the market as a whole, in the lower priced year improvement since June 2010 when the High Court against homeowner Melric brackets increases of up to 10% are still being economy was recovering from the recession McEpieuw has been postponed to enable seen annually. of 2008/09. “Workers feeling the pinch are Absa to produce the documents relating to the Given that The Economist’s survey shows demanding more cash, while the economy is securitisation of the home loan and to disclose that South African residential property is making increased economic activity difcult,” he the buyer. Absa apparently first claimed still undervalued by 5% on the price to rent adds. “We are, indeed, in a very tight spot.” that the documents were destroyed in a fire ratio index, South African property investors Te January quarter-on-quarter growth fgure before admitting that the home loan had been can look forward to further signifcant rental of 1.6% indicates a slight pick-up in the growth securitised. growth and steady capital growth. Te fact that trend, but not enough to halt the declining year- In the meantime, NewEra is encouraging all South African rentals are well above average, on-year trend. Te BETI is currently indicating homeowners to request the National Credit in relation to the global fgures, suggests that that GDP growth will still be positive, but low. Regulator (NCR) to investigate the practise capital values must continue to rise. of securitisation in South Africa, which is clearly an infringement of our rights as credit consumers. Visit www.newera.org.za for more information. 20 March 2013 SA Real Estate Investor www.reimag.co.za
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RESIDENTIAL HOT SPOTS PROVINCIAL PERFORMERS Highlighting the top performing suburbs in the major provinces, based on highest rate of annual inflation and indicated for e ach value band. Mid Value : R250k – R700k High Value : R700k – R1.5mil Luxury : R1.5mil + Gauteng Gauteng Gauteng Cosmo City - City of Johannesburg 20.84% Refilwe - City of Tshwane 18.69% Fernridge Estate - City of Johannesburg 17.23% Honeydew - City of Johannesburg 18.42% Sydenham - City of Johannesburg 17.23% Victoria - City of Johannesburg 10.98% Western Cape Western Cape Western Cape Summerville - City of Cape Town 25.00% Avalon Estate - City of Cape Town 25.77% Schoneberg Estate - City of Cape Town 21.38% Lindida - Stellenbosch 18.87% De Molen - Swartland 15.62% De Zalze Golf Estate - Stellenbosch 11.54% Eastern Cape Eastern Cape Eastern Cape Alexandria - Ndlambe 24.94% Headlands - Buffalo City 11.22% Bonnie Doon - Buffalo City 10.38% Tyutyu North - Buffalo City 22.78% Rosemount - Buffalo City 11.02% Vincent - Buffalo City 8.37% Kwazulu Natal Kwazulu Natal Kwazulu Natal Shakaskraal - Kwadukuza 16.90% Stanger Manor - Kwadukuza 11.03% Zinkwazi Beach - Kwadukuza 11.26% Shastri Park - Ethekwini 15.53% St Winifreds - Ethekwini 9.93% Dunkirk Estate - Kwadukuza 8.36% Free State Free State Free State Merriespruit - Matjhabeng 24.74% Jordania - Moqhaka 13.58% Woodlands Estate - Mangaung 8.96% Phuthaditjhaba-A - Maluti A Phofung 19.96% Panorama - Moqhaka 11.94% Kwaggafontein - Mangaung 6.06% FREE STATE Presenting the Top 5 suburbs per area value band in Free State based on the highest rate of inflation for a 1 and 7 year period. The median represents the current median value for the suburb. # Suburb 1 year Median # Suburb 7 year Median Mid Value : R250k – R700k Mid Value : R250k – R700k 1 Merriespruit - Matjhabeng 24.74% R 410 000 1 Phuthaditjhaba-A - Maluti A Phofung 289.43% R 400 000 2 Phuthaditjhaba-A - Maluti A Phofung 19.96% R 400 000 2 Petrusburg - Letsemeng 219.77% R 460 000 3 Welkom Ext 19 - Matjhabeng 18.62% R 360 000 3 Paul Roux - Dihlabeng 207.20% R 480 000 4 Marquard - Setsoto 15.63% R 430 000 4 Welkom Ext 19 - Matjhabeng 198.21% R 360 000 5 Ehrlichpark - Mangaung 14.24% R 610 000 5 Blomanda - Mangaung 196.27% R 380 000 High Value : R700k – R1.5mil High Value : R700k – R1.5mil 1 Jordania - Moqhaka 13.58% R 900 000 1 Hospitaal Heuwel - Dihlabeng 121.96% R 1 050 000 2 Panorama - Moqhaka 11.94% R 980 000 2 Harrismith Central - Maluti A Phofung 115.70% R 760 000 3 Universitas Ridge - Mangaung 9.21% R 1 400 000 3 Sasolburg Ext 4 - Metsimaholo 114.34% R 840 000 4 Hospitaal Heuwel - Dihlabeng 8.76% R 1 050 000 4 Panorama - Moqhaka 110.02% R 980 000 5 Park West - Mangaung 8.69% R 1 000 000 5 Roodia - Metsimaholo 106.82% R 740 000 Luxury : R1.5mil+ Luxury : R1.5mil+ 1 Woodlands Golf Estate - Mangaung 8.96% R 2 550 000 1 Woodlands Golf Estate - Mangaung 115.73% R 2 550 000 2 Kwaggafontein - Mangaung 6.06% R 1 700 000 2 Hillsboro - Mangaung 73.62% R 1 500 000 Disclaimer: Lightstone applies advanced statistical methods to a comprehensive property data base - compiled from the Deeds Office, the Surveyor General and other sources - to generate property market data, insights, trends and forecasts. Despite the statistical and actuarial rigour applied, Lightstone cannot guarantee the accuracy and reliability of the data. Furthermore, any information provided does not amount to advice and may not be applicable in some cases. Lightstone does not take responsibility for any losses incurred as a result of any person acting or omitting to act as a result of the publication of this information.
REI Residential Is Street Justice JHB Gets General Rental Golden Rules The Answer? Valuation Roll During the Constitutional Court hearing Te 2013 General Valuation Roll is in its fnal So you’re looking to rent a property? Michelle on the municipal rates boycott, Chief Justice stages and will come into efect on 1 July 2013. Dickens, Managing Director of TPN, points Mogoeng Mogoeng commented that the Te valuation roll allows the City to generate out that by following a few golden rules, court’s decision would have a profound efect rates on what it calls an equitable basis and renting is a happier process for landlords and on the approach to service provision, the property owners will be notifed of their new tenants alike. Dickens says that the majority of failure to pay for services, and protests related values in their February municipal statements. tenants have a proven track record indicating to service delivery. His comment summed up This is the word according to the City of a history of Good Standing tenant behaviour. perfectly the depth of the conundrum facing Johannesburg’s property valuer. This allows Landlords of a house or fat should always carry the court, for as pointed out in its report on the City to generate rates on what it calls out a thorough tenant check before signing a the matter, two key questions are raised by the an equitable basis and property owners lease agreement. “Successful landlords match dispute: will be notified of their new values in their quality tenants with their carefully selected * Should taxpayers be expected to continue February municipal statements. The City of rental stock. Tenants require good value, good paying municipal rates and taxes ‘for ever and Johannesburg’s website sites the latest General location, and neatly maintained properties,” ever’, even if they receive poor services? Valuation Roll as the basis for market value of she continues. “The dynamic of the tenant * Could they stop paying, or would you have all properties as of 2 July 2012 as an indication / landlord relationship is often fraught with to ‘turn to the streets’ in protest against poor of the most likely price a property would realise frustration but following these steps will help service delivery? on the open market by willing parties. to ensure the tenant understands his rights as well as his obligations.” Valuable Input Cristina Rosa, Richard Rubin, CEO, Kay Geldenhuys, Lanice Steward, MD, Bill Rawson, Property Specialist, Aengus Properties Manager, Ooba Knight Frank Anne Chairman, Rawson Engels & Volkers Porter Property Group “Te younger you are “Key to our success has “When you start “When looking to buy, “South African homes when you buy the been understanding planning to buy a the fnancial health of increased in value quicker you can pay that students are house, the most a sectional title scheme by 5% year-on-year your property of and not that diferent important thing to do should be assessed in 2012. Only Hong the more debt free to any other type of is get your fnancial carefully. Ask the Kong (with a 21.8% you can be. With residential tenant. afairs in order early, a agent for copies of the growth rate) and less debt comes more Tey’re looking for good credit rating can’t fnancial statements Austria (with 10.1% credit, should you safe, well managed be achieved overnight, and check whether the growth) performed want to invest in more accommodation in a you should do what you levies are being put to better.” properties later in life.” convenient location.” can to score well right good use.” away.” www.reimag.co.za March 2013 SA Real Estate INVESTOR 23
SMART MOVES BY DR MARNUS WESTSTRATE As My Properties Live And Breathe Long term projections y property portfolio is alive, Property Software not only helps you do tenant in time is essential for avoiding costly constantly changing and growing good projections, but adds even more value vacancies. Te second is receiving notifcations Mmonth by month. True, it is a by explicitly tracking the performance of your when you haven’t received your rent on time or slow growth, but there is constant movement portfolio over time and assisting with the are forgetting an outgoing payment that’s due. nonetheless. This slow movement is one of management thereof. Getting email reminders for these routine tasks the things that makes property investing so If I come back to a projection I did for a is a simple feature with far-reaching benefts. appealing. You can buy a few properties, have property six months or a year later much would Tracking the past gives a much better letting agents manage them, and then sit back have changed: there should have been some indication of the future, and actively while your cash flow grows to break-even, capital growth, a rental increase and perhaps managing your portfolio can help keep earning a steady income through capital growth interest rate changes. Efectively “Year 0” has that future rosy. With the right property in the mean time. But, every so often it becomes moved forward, and so the values must be software you can know where you stand, necessary to delve into the details. updated while incorporating the last year’s maintain peace of mind, and enjoy the sense In last month’s article on property software performance in the new projection. If the initial of achievement that goes with it. I wrote about projecting future performance values are now lost I’m not really gaining, but PROPERTY SOFTWARE and how the right software can help with keeping track of them as past performance comparisons when buying a new property. will have considerable benefit for making Property Software can assist in I now raise another question: What about assumptions about the future. efective portfolio management by: managing your existing portfolio? Among other Detailed tracking is important when it’s things efective portfolio management has two needed. Interest rate changes or unexpected Tracking changes such as new 1 requirements: being notified of important maintenance such as a burst geyser is seldom valuations, rental increases and events or when problems occur so action can considerate in the sense of conveniently interest rate changes as they be taken, and keeping track of changes to your occurring at the start of a financial year. occur. portfolio as they occur. Tracking them requires a fne grained monthly Take maintenance for example, planned or view of your portfolio, while the relatively slow Keeping track of past performance 2 unplanned – while not time consuming when growth of a property portfolio necessitates a which should be the basis for managed by an agent – it does boil down to a long-term yearly history and projection of your future decision making. negative effect on your cash flow. Vacancies investments. Good property software should can also be sudden killers of income, and that provide you with both, and make switching Sending you reminders to check 3 aside, interest rate changes are certainly the between such monthly and yearly views simple rent received and outgoing number one contributing factor in sudden and intuitive. payments that needs to made. cash flow changes affecting your return on When it comes to reminders I see two investment. Keeping track of these events can significant needs: firstly, being reminded of 4 Notifying you of expiring leases so be cumbersome, and so can tracking property expiring leases so you can organise a timely you can organize a timely renewal. valuations or even remembering to value your renewal. Experience has taught that not all properties from time to time which is essential letting agencies are as on top of this as they RESOURCES for knowing when to refnance. I believe good should be; yet, when necessary, replacing a 88 Pockets 24 24 March 2013 SA Real Estate Investor www.reimag.co.za
The All-in-One Property Investing Software PRICING STARTS AT R99 pm Receive automatic reminders for rent due, expiring leases and cash flow tracking! Full Portfolio Performance Long Term Cashflow Scenario Rental Analysis Reporting Projections Planning Comparison Tracking Get started with a 30 day free trial www.propertyfrontier.com
STRATEGIES BY KOOS DU TOIT Property Investment Avoid a short-term perspective Quality of investment decisions ne of the biggest pitfalls in was around R400 000 - and patiently held their property investment is a short- Given the reality that a short-term perspective investment for the long term, will understand Oterm perspective, which obscures obscures the long-term trends and the market the value of a long-term perspective, given the reality of the property market, reduces the cycles, it is easy to understand how a short-term that the average house price is now standing at quality of investment decision-making and perspective can seriously impair the quality of around R900 000. Over 20 years, the average overlooks opportunities to build true wealth investment decision-making. values of properties have doubled, and if the based on inflation-liked passive income and properties were bonded, those bonds are now capital growth that can accrue for generations. Many investment advisors and experts paid off. So, in addition to massive capital warn investors not to over-react to short-term growth and the rental income these investors Obscuring the reality volatility and to stick to their long-term plans, received over the last 20 years, they now have Year-on-year and month-on-month data are because over the long-term, the short-term a bond-free property still producing steady published regularly in the media on a range of volatility is smoothed out and the long-term capital growth as well as an ongoing infation- topics - from infation to house price growth. trends begin to yield results. Unfortunately, linked passive income for as long as they hold Because the data - and its interpretation - is many investors disregard this advice and react the property. And the same will happen with focussed on the short term, the longer-term to short-term volatility by selling at a loss and properties acquired today and held for the next picture is often obscured. then missing the recovery which would have 20 years. seen them recoup their losses. How long is long? All markets - including the stock market and, to a lesser extent, the property market - move This is also clearly evident in the property If you are investing in property, your erratically over the short term. But over the long investment market when over-eager property investment horizon should be no less than the term - 20 years - the short-term volatility evens investors buy overvalued properties at the duration of a mini-cycle - at least seven years. out and the curves of the graphs smooth out, height of the boom phase of a cycle. When the If you really want to see great returns, keep revealing the real long-term movements. market falters, they try to sell the properties, your investment property for at least a macro- but in the down market they cannot sell the cycle of around 20 years. In the case of property prices in South property for a proft - and sometimes not even Africa, short-term data indicates that house for the price they paid for it. A few years later, But if you want to create infinite returns price growth is currently slow if not stagnant. when the cycle turns up again and property on your property investment, plan to keep it But if the long-term data is considered, there prices are on the rise, these investors realise forever. The longer you hold a property, the is no doubt that house prices in South Africa that they could have sold the property for much higher the return on investment, because have continued to rise, steadily but surely, more if they had waited a few years and, in the longer you hold the property, the more even when the data is adjusted for the efects addition, that they will never again be able to rental income and the more capital growth of infation. buy a similar property for the price they paid a the property generates - and if you acquire few years ago - even if that price had been over- the property in a trust, that could mean for Te longer-term picture also clearly reveals the infated at the time. generations beyond your lifetime. cycles in the property market. In South Africa, Opportunities to build true wealth the property cycles usually stretch between 5 to RESOURCES 7 years, while the macro property cycles tend to Investors who bought property in the 1990’s - play out over 20 years or so. when the average house price in South Africa P3 Property Group 26 26 March 2013 SA Real Estate Investor www.reimag.co.za
GETTING STARTED BY KOOS DU TOIT Buy-To-Let too good to be true? Acquiring a portfolio of properties reating wea lth th rough the such a portfolio of properties, because they can buy-to-let property investment system For most South Africans, a portfolio of tap into the expertise of professional property Cis so simple that many people believe properties seems out of reach, because they do investment groups, such as the P3 Investment it’s “too good to be true”. not have a lump sum to invest and they cannot Group, by simply implementing their tried- aford huge monthly investment contributions. and-tested systems. How can ordinary South Africans create a stream of passive income that keeps pace with But you don’t need R500 000 to buy an T he s e s y s tems not on ly prov ide infation year after year, and beneft from capital entry-level property, you merely need a bond. step-by-step plans tailored to your unique growth at the same time? How do they acquire Establishing a trust in which to acquire your goals and circumstances but also provide a portfolio of properties without lump sum investment properties, will not only provide the essential services and products to ensure investments or large monthly contributions? asset protection, but also allow you to obtain success, such as custom-designed software to And how can all this be done without special multiple bonds for multiple properties. And ensure the right properties are acquired, and skills or knowledge, and without much time or using the services of a professional bond access to approved specialist services such efort? It seems just too good to be true. originator specialising in buy-to-let property as rental management agents to manage the fnance, such as P3 Bonds, will ensure a higher tenants and rental insurance to provide cover But when you look a little deeper, you fnd it is rate of success in obtaining the right fnance. against late or non-payment of rental and the “not too good to be true” - it is just a tried-and- cost of a possible eviction. tested system that has proven over time to be But, of course, the bond needs to be repaid the best, and simplest, way to fnancial freedom each month and most people cannot afford If investors use these resources available and wealth. another bond repayment. But remember, the to them, they will find that building and property is generating a monthly income and, managing a buy-to-let property portfolio really Passive income and capital growth if you have selected the right property in the requires a minimum of time and efort. Investing in a buy-to-let property allows you right area with the right bond finance, the Great, but not too good to be true to create a stream of passive income that keeps rental income should cover most - if not all - of pace with infation year after year, because the the monthly property expenses, including the Using this simple but highly efficient property is generating a monthly rental income monthly bond repayments. tried-and-tested system, ordinary South that increases each year with infation, or the Africans can acquire a buy-to-let investment percentage stipulated in the lease agreement. Over time, as the monthly rental income properties using bonds to finance the This income is passive, because you receive increases and the biggest monthly property acquisition and using the rental income to this income regardless of whether or not you expense - the bond repayment - remains fairly cover the monthly property expenses. In this are working and regardless of where you are static, the property begins to produce a growing way, they can build up a portfolio of buy-to-let in the world. monthly profit. This can be used to pay the properties that generates an inflation-linked bond of faster, or to cover the shortfall on your passive income for life, while also producing At the same time as it is producing this passive next investment property. And the system can capital growth - and all this without a lump income month after month, the property is be implemented over and over until you have a sum investment or hefty monthly investment also appreciating in value year after year. And portfolio of properties. contributions, and without special skills or a this capital growth can be accessed without massive investment of time and money. Efcient and efective selling the property (and thus losing the monthly passive income) through, for example, Investors really don’t need any special skills RESOURCES refnancing or a second bond. or knowledge, or much time or efort to build P3 Investment Group 28 28 March 2013 SA Real Estate Investor www.reimag.co.za
GETTING STARTED BY CAJ VAN ZYL Student housing Tapping into a Growing Market ith the change in our democracy and our difficult employment Wenvironment, the historically disadvantaged are now focking to get educated loan to the student to cover expenses such as and gain skills at tertiary level. Tis all is great accommodation, tuition and pocket money. Te news for the student accommodation market. loan needs to be paid back once the student gets Most universities are inundated with employment after his/her studies. applications from learners. These institutions You would typically find high numbers of City council and a guideline for student have not kept track with the growing demand NSAFS students enrolling at the tertiary accommodation establishments. The policy for student accommodation and can only institutions in areas such as Johannesburg, requires that you apply for consent-use rights offer limited space on campus to the these Pretoria, Bloemfontein, Durban and Port on a residential zoned 1 property (up to 10 learners. As a result of this, the private student Elizabeth. Cape Town, Stellenbosch and people on a property, over 10 people rezoning is accommodation market has grown exponentially. Potchefstroom have larger numbers of private required) and comply with minimum standards “This is an untapped market, particularly students and also much higher asking prices with regards to amount of people on the in emerging economies,” says CEO of for student accommodation. Tis demographic premises, ablution, parking, minimum room student accommodation specialists, Aengus profile lays the foundation for student sizes, communal areas, approved building plans Investment Properties, Richard Rubin. accommodation investments and hot spots. and caretakers. “Whether you’re in Rio de Janeiro or Accra, Institutions such as the University of Requirements for accommodation there is a severe shortage of safe, secure, Johannesburg now have accommodation afordable accommodation for students globally. Te 2011 ministerial report on student housing accreditation policies in place. Tese policies It’s proving to be an excellent investment makes scathing conclusions on the state of are relevant when housing NSFAS students and opportunity regardless of macroeconomic student accommodation currently available and restrict the landlord to a standard price point conditions afecting the property environment.” the severe shortage of quality accommodation (currently R2500pm for 10 months) with no Historically, accommodation for students nationally (currently the national shortage is additional charges allowed. has been provided by tertiary institutions estimated at 200,000+ beds with over 500,000 Challenges for student themselves, but as operating budgets are slashed registered students). As such, a variety of accommodation landlord and property becomes increasingly expensive to minimum accommodation standards have now acquire and maintain, many universities are entered the equation and various departments Traditionally most students could rent a outsourcing the provision and management such as the Department of Health, local property on a fully inclusive basis. Electricity of student accommodation to independent city councils and the institutions themselves and water would be included in the price. Tis companies and in many instances partnering are now actively involved in regulating the model has suffered severely as a result of the with them to do so. industry. High incidences of slum lording and continuing price increases by Eskom and the Te largest component of learners nationally is anti-social behaviour by the students has been reputed negative behaviour of students with now on the NSFAS (National Student Financial noted nationally and the need for a more formal regards to electricity conservation. Aid Scheme), a multi-billion rand government and regulated approach has become apparent. Housing NSFAS students requires the fund put in place to assist students with funding In Johannesburg you will fnd the commune landlord to ofer fully inclusive monthly rental. at tertiary level. The scheme provides a “soft” policy – a policy enforced by the Johannesburg This has forced most landlords to consider 30 30 March 2013 SA Real Estate Investor www.reimag.co.za
RESIDENTIAL Denise Viljoen, GM of Private Student Accommodation, answers some questions on student letting. What do students want in accommodation? First of all safety and security especially in the current climate of crime in SA. Student houses have become a soft target for criminals who know that students tend to be laid back, also that some students have classes at night and have to walk back home. Secondly properties within walking distance to their institution, some students do not have access to their own transport and don’t want to pay extra for public transport. Key features that students require in greener energy solutions as well as restrictive What makes them prefer one place to a property measures on utilities consumption such as post- another? paid electricity meters per bedroom. Most students require a room that is semi- Some key factors are visible security (eg, The standard student enters into lease furnished (bed, desk, wardrobe, curtains). electric fencing, panic buttons, razor wire, agreements of 11 months (NSFAS 10 months) Communal washing, bathroom and cooking fencing, outside lighting) and walking distance to their institution. Cleanliness and thus causing a standard vacancy of 1-2 months facilities are the order of the day. Typically price tidiness and good maintainance. on the property. It is not often that you will points for private accommodation (cottage, fats) What are added extras that students enter into a 12-month lease agreement, thus will be much higher than communal living. Te request? provision for vacancy needs to be built into your provision of Internet services on the property DSTV, Internet access, cleaning service, cash fow model. has now become a reality. Walking distance maintenance service, furnished Landlords housing NSFAS students that are to the institution carries a price premium. Te accommodation. located more than 2km from the university, now provision of transport services is required if the Where is there a need for accommodation? also need to provide daily transport services, an property is more than 2km from the institution. Anywhere in SA where there is a study additional cost that needs to be budgeted for. institution, a lot of service providers Hotspots (accommodation) cater for the larger Letting agents Your hotspot areas would typically be located institutions but tend to forget about the smaller ones (eg, private colleges, IT colleges). When investing in student accommodation within a 2km radius around the major national What areas are the most popular? it is important to employ a reputable and campuses. Areas adjacent to their institution. specialist letting agent that understands the Western Cape and Potchefstroom properties What is the average price that investors student accommodation environment with all demand a much higher average rental due to get when letting to students? of its challenges. There is a big difference in limited supply, specifically in areas such as Difcult to say as prices vary, depending managing a townhouse occupied by a family Stellenbosch. In these areas it is common place on the availability of accommodation, vs a student commune/residence occupied by for parents to buy a student property whilst their area, city, institution ect (eg, for a room multiple students. children are still studying. Tese areas also have in Bloemfontein R2000.00 pm and the Regulations with regards to noise control, a much higher entry price point yielding a lower same room in Stellenbosch would get you health and overcrowding and the management return when compared to properties in Gauteng, R3000.00 pm). thereof become applicable. Properties can be Kwazulu-Natal and Bloemfontein. Factors to What risks do they carry when letting to students? forced to close down if these regulations are consider would be capital appreciation of the Student accommodation is a seasonal not met. property vs income yield. business, accommodation are mostly let The effective management of security during the months of January and February. deposits, compliance with the EAAB, the Risks will be if the students quit school Rental Housing Act, FIC Act as well as after the frst semester you might sit with financial and performance reporting are all an empty room for the remainder of the items to look for in a letting agent. academic year. Damages, if student groups Understanding the local pricing environment in communes are not properly controlled. and the required accommodation needs are How long do students sign leases? integral qualities of the agent. Some areas have From the day of occupation to the end of a much larger need for shared accommodation December. and other areas require more upmarket RESOURCES and private accommodation. Post graduate Let And Stay candidates and visiting lecturers come with Firststay Student Accomodation their own requirements. Private Student Accomodation www.reimag.co.za March 2013 SA Real Estate INVESTOR 31
IMPROVING BY ANGIE REDMOND Add Value To Your Kitchen Without breaking the bank re you planning a kitchen renovation? triangular pattern. Tis arrangement will turn The role of your kitchen A well thought-out and detailed plan your kitchen into a pleasant communal area. The perception surrounding the role of a Ais a must before you begin remodeling kitchen in the dynamics of the home has Fixtures on a budget your kitchen. This plan should be designed been redirected. With lifestyles becoming keeping in view the current good and bad With so many flooring options available, busier, faster and more convenience-centred, aspects in your kitchen. You also need to decide consider the advantages and disadvantages of the kitchen has once again taken the role whether you plan to design the kitchen yourself, the different options. Ceramic tiles, wooden of the multifunctional heart of the home, use a kitchen or interior designer or work with a floors and eco-friendly materials are good where entertainment, work, cooking and reputable kitchen installer or home centre. options for good looking and durable fooring, Here are some tips and ideas on improving but so are polished concrete and natural stone. OPTIMUM SPACE and remodeling your kitchen without breaking How you use your kitchen should determine the Optimum workspace the bank account. most practical fooring within your budget. Modern trends show that nowadays Kitchen flooring: Hardwood or laminate Use 3D rendering foors add class to your kitchen. Ceramic tiles couples or nuclear families often cook together and share kitchen chores. With 3D rendering software, many of which that look like marble is also a great idea to be Thus workspace in today’s kitchens are free, you can now create and edit images of considered. should be utilised such that more your ideal kitchen. Before spending any money Sink settings: A stainless steel deep inset sink than one person can work efciently on renovations, experiment with 3D rendering with two or three compartments and a fancy tap without getting in the other person’s to fnalise the ‘look’ for your kitchen. ftting for your sink should give your kitchen an way. You can also create distinct work instant facelift. Decide on colour schemes Granite top overlays: Opt for the granite centres by separating workspaces with sinks, microwave or other appliances. For a sunny look use warm colours such as red, overlays that simply go on top of your existing orange and yellow. Large kitchens that receive kitchen counter surface. It looks almost as good Storage space a lot of natural light may look better with a cool as the real thing! Modern trends also indicate that colour scheme, in leafy green and sky blue. You Cupboard doors: Simply redoing the cabinet nowadays with women working out, can also use neutral colours such as white and doors in bold dramatic colours will infuse new very few items are cooked from scratch grey and have one wall painted in a brick fnish life into your kitchen. and storage space for items needs for a more dramatic look. Decorative lighting to be increased. Thus cabinets have Consider the shape Using light fxtures strategically can make your entered the scene in a big way. One can choose from frameless and framed Te kitchen is no longer just a room meant for kitchen dazzle. Skip fuorescent ceiling fxtures cabinets and can order from custom or cooking. It is now a space for families to eat and go for mini chandeliers, dinette pendants, standard designs. Check for rollout, tilt- together and socialise with guests. Reorganise recessed lights and island track lights. Our best out and other storage features inside your kitchen into a U or L shape, and keep recommendation is to get under-cabinet lights. the cabinets. the sink, cooking range, and refrigerator in a Tey make your kitchen look ultra-glamorous. 32 March 2013 SA Real Estate Investor www.reimag.co.za 32
RESIDENTIAL A BASIC PLAN If you are going to be undertaking a do-it-yourself kitchen remodel, below are some common design mistakes: The most important consideration for kitchen design is allowing enough clearance for cabinet doors, pullout drawers, dishwasher doors and accessories that extend into the room. Inside corners are a particular problem for clearance. Be sure drawers and doors have enough room to fully extend. Another area where mistakes can occur is where the trim and molding meet cabinets, especially if custom-sized appliance and cabinets are used. If recessed lighting under the cabinet is used, be sure to recess the bottom relaxing all take place in one space. As this selling price, if it is not accompanied by a top- of the cabinet so the lighting doesn’t room becomes the veritable central nervous end kitchen brand.” show. system of the home, people are placing much Kitchen sinks Make sure all existing electrical outlets higher importance on its design, functionality, are appropriately placed in the new aesthetics, quality and its longevity Sinks are an important element in any kitchen. confguration. Tese are available today in a variety of colours, If the counter has an overhang, make But, does an investment of this size have more materials, sizes and design options to suit every sure the drawers and doors still operate than just ‘lifestyle and convenience” returns? pocket. You can choose from cast iron, stainless freely. Does it proportionally increase the value of your steel, plastic, and top-mount or under-mount When commercial appliances are used, home? According to experts, when it comes to models. You can also select from single-bowl, their heavier weight may require extra selling property that has been developed or double-bowl, deep and shallow models. fooring support, or they may need to renovated, the kitchen can play a significant Avoid common design mistakes be built up to match counter height. role in the selling process. Architects, real estate agents and luxury kitchen suppliers all When working with professionals; they can agree, the kitchen is vital in clinching the sale. prepare detailed working drawings for the Although a high-end kitchen may not heavily installation contractor to follow. A certified infuence a property’s selling price, it will ensure kitchen designer knows how to organise that the property sells much faster, with less materials and elements in the space provided. negotiation. Pola Jocum, one of Seef Properties However, this is still your kitchen and senior real estate agents, ofers her opinion on ultimately the space should be designed around the issue: “A top-end home in an expensive area your needs and wants. is less likely to achieve its greatest potential www.reimag.co.za March 2013 SA Real Estate INVESTOR 33
STRATEGIES BY JOHN ROBERTS What Is The Return? On your investment nvestments have little meaning without a return. Property is no different, whether Ithat property is the primary residence or one of the pillars supporting the portfolio. By definition, the return on investment (ROI) is a performance measure evaluating the efciency of an investment or comparing the efciency of a number of diferent investments. In calculating ROI, the benefit or return is divided by the investment cost with the result expressed as a percentage or ratio. Coupled with the initial cost of R13600, the by leaving the capital in the bank, that ROI is investor has sunk R73600 in the frst year. If not immediately obvious in terms of growth in Te versatility and simplicity of this equation the monthly rental income was R3000, the the bank account. It will only come to fruition means ROI is a popular metric - when the R36000 annual rental would be ofset against many years down the line, underpinning the investment has a negative ROI or there are the cash fow. reality that property is a long-term investment other opportunities with higher ROIs, the commitment. investment should not be undertaken. Te ROI would show 50% in the frst year in this simplistic calculation. Not factored into the It is an element of which investors must not In short, investing R500000 into an account equation are the rates and taxes, maintenance lose sight when calculating that opportunity that pays 7,2% interest annually (R36000), costs, body corporate levies if applicable, future cost. means the ROI is 7,2%. Similarly, purchasing capital gains due on the property and the tax Property is not something for which investors a R500000 house and renting it out for R3000 incurred against the income. enter and exit the market swiftly to make a per month, thus R36000 per year, translates quick buck. Te associated costs alone prohibit into an ROI of 7,2%. However, what this equation does illustrate is that approach. that ROI on property can be quite high when Applying ROI to property can become more coupled with gearing or leveraged finance. Where the ROI on property comes into its complex when the investment is refnanced or a Essentially, it means growing the investment own is as a retirement income. Purchasing those second bond taken out. Te interest rate on the and maximising the ROI by playing with other properties early enough that they have evolved second or refnanced loan may increase and new people’s money - in this case, the bank’s capital into income-generating investments, rather fees charged, both of which will reduce the ROI - rather than your own. than ones eating into cash fow, paves the way when applied to the equation. for a solid monthly rental income. However, a common mistake is confusing The property may also require additional ROI with cash fow. In this example, the cash Tere still remains the reality that those rental maintenance costs and taxes and an increase in flow is the difference monthly or annually properties have an underlying appreciating utility rates if these costs are borne by the owner between the income generated by the rentals capital asset that, despite the associated costs of the residential rental or commercial property. and the required expenditure that must come including capital gains tax, will ofer a bulk cash However, these are not insurmountable from your pocket. Te R5000 bond repayment injection on liquidation. issues given a small amount of mathematical against the R3000 rental means the investor is application. liable for another R2000 each month to cover South Africa has a key housing shortage the investment. relative to its population and as the middle- Again taking that R500000 property example, class grows exponentially, the demand for let us assume it was a fnanced purchase rather Tat is also an opportunity cost investors must housing comes under increasing pressure. Te than a cash one. In that case, the buyer only factor into their decision-making process when economics of supply and demand mean house covered the costs associated with that purchase, purchasing the property, as it raises the question prices will continue rising, paving the way for namely the bond, registration and transfer fees on whether that R24000 annual cost could be investors to capitalise on ROI. and other sundry costs, amounting to R13600. better spent on another investment. Te bond repayments would be R5000 monthly However, it does mean that while the ROI RESOURCES or R60000 in the frst year. on the property is 50% against the 7,2% gained Just Property Group 34 34 March 2013 SA Real Estate Investor www.reimag.co.za
SMART MOVES BY ANGIE REDMOND Home Insurance A Small Price To Pay For Peace of Mind new house brings with it a wealth of Managing Executive of Insurance at ooba, damage caused as a result of unexpected events new responsibilities. One of these is South Africa’s biggest bond originator and like fre, food and lightning. Your bank will A that you need to consider what will provider of insurance cover for all property insist that you have such cover, but they can’t happen to you, your family or your house if your matters. “In some cases your bank will insist on compel you to take their insurance ofering. If circumstances change. No matter how unlikely some form of cover; in others it is optional – but you wish, you can obtain buildings insurance this may seem, life is full of surprises, and you in all cases it’s a good idea.” cover from any accredited insurer, freeing need to plan for every eventuality. you up to compare costs, coverage, benefits, Buildings insurance Te best way to make sure that you are covered reputation and service. in a crisis is to have sufcient insurance in place Buildings insurance is one of the most “Buildings insurance protects your home to help you through any difcult times. important policies you will purchase. It covers from costly damage caused by unforeseen “Tere are two main types of insurance that the structure of your home as well as all the circumstances,” says Young. “For instance, if a homeowner should have,” says Craig Young, permanent fixtures and fittings in it, against your geyser bursts, the insurance will cover its replacement and any consequential loss up to a certain limit such as the costs of home repairs and painting. “Your home is usually your most expensive asset, but maintaining a home can be expensive, and when unplanned events occur, it’s incredibly beneficial to have this kind of insurance as a lifeline,” says Young. “Tis is why banks make it compulsory – they are safeguarding your asset.” Bond protection insurance Of course, when you consider buying a property, you work out whether you can aford the repayments – and if you’ve had your bond approved, obviously your bank thinks so too. But both you and your bank have to count on you remaining employed and in good health. “It is very important to consider what would 36 36 March 2013 SA Real Estate Investor www.reimag.co.za
RESIDENTIAL FOR BUILDING INSURANCE: What it costs cover the bulk of your expenses if the loss forms When you’re buying a house, the last thing part of an insured event. Look at the specifed amount or limit you want on your plate is an extra expense. Just For bond protection insurance, your for buildings cover protection. remember that a small monthly payment now premiums are determined in line with various How much will it cost to rebuild your can save you from enormous financial strain socio-economic factors which include monthly home? Not just the resale value as this later. But of course, you’ll want to know exactly income, age, gender, smoker status and level may difer wildly. how much it will cost you and whether you’re of education. However, with a product like Does the policy cover accommodation getting the best deal. ooba’s Bond Protector no medical clearance for you, should your home become “Because insurance cover can be tailor made is required and you can qualify for cover up to uninhabitable? for your specific circumstances, taking into R1.25 million (pre-existing conditions may be Does it cover outside buildings? account your situation as well as the value of excluded). If you are in a high-risk food area, are your house, it’s not possible to put a single, ooba’s competitive insurance ofering is made you covered? straightforward cost to bond protection and up of buildings insurance and bond protection In addition to the overall structure of buildings insurance,” says Young. insurance tailor made for your specifc needs, your property, what permanent fxtures For buildings insurance, the structure of your from the home loan experts. And ooba ofers and fttings are covered, if any? house – what the building and the roof are made the convenience of taking out insurance at the Do you live in a high crime area? of – as well as the type of residency – holiday time of applying for your bond, saving you time What about the style of your house? Do home or permanent residence – all play a role and hassle. you have any unusual features? Or is in the risk assessment and therefore, the cost of FOR CONTENTS INSURANCE: your property a listed building? your premiums. Tis type of cover will always be subject to exclusions and excesses, but will Look at the specifed amount or limit happen to you and your family if, for some of contents cover protection reason, you were unable to pay your bond Have you got everything valued “Just remember that a accurately? for any period of time,” says Young. “Bond protection insurance provides comprehensive Are your antiques or valuables covered, cover in the event of death, disability, dread small monthly or do you need to take out separate disease or retrenchment.” cover for these? It may work out payment now can save Your bank may not insist that you have this cheaper to get them insured separately type of cover, but Young advises you consider with a specialist contents insurance it, nonetheless. “No one likes to think of bad you from enormous provider. happen to you, the best outcome is that you or fnancial strain later.” Do you have children or animals? luck befalling them, but if something bad does It could be worth adding accidental your family won’t lose your home,” he says. damage to your policy. Do you have any single items that need to be insured? Do you live in a high crime area? How far outside of your home are your items covered for? Does the policy cover your items when you are abroad? Remember, when it comes to fnding a buildings or contents policy for your needs, always give accurate and appropriate information. That’s because when it comes to making a claim, honesty is always the best policy. Your claim may be deemed null and void if you give if you give false information, fail to attend to the general maintenance in the policy or fail to carry out repair work on previous claims. RESOURCES Just Property Group www.reimag.co.za March 2013 SA Real Estate INVESTOR 37
SECTIONAL TITLE BY ANGIE REDMOND Getting To Grips With An AGM Your vote counts he main reasons to attend the AGM A very common cause of dissatisfaction be done, because it is a right each owner has in a sectional title complex if you are among owners is the behaviour of trustees and he should use it to ensure a fair outcome. Tan owner, is a semblance of control of and the chairperson. Every owner is entitled If a sectional title scheme has problems the unit the fnancial situation or better knowledge of to nominate one or more persons – including owners should know about them. the complex’s operations, says Michael Bauer, him or herself – to serve as a trustee and then, The Prescribed Management Rules, says general manager of the property management at the AGM, to vote for their election. Tere Bauer, say that the proxy’s appointment must be company, IHFM. is no need to suffer because of incompetent in writing and must be handed to the chairman or overzealous trustees. The AGM is the before the meeting (a late posting excuse is not Attending the AGM is the sectional title opportunity for owners to vote in people of their acceptable). owners’ only real chance of infuencing how choice for this very important function. Anyone except the managing agent and/or their scheme is run. The prescribed rules his/her employees can be a proxy. specify a number of very important items that Once suitable trustees have been voted into Tere are two types of proxies and it has to must be considered and decided on by the office, there is opportunity at the AGM to be specifed which votes he or she can make. owners at the AGM. Tese decisions directly direct or restrict their activities. Any owner An ‘open’ proxy allows the proxy to vote on affect owners’ lifestyles and pockets so it’s may make such a proposal. Examples could be anything on the agenda at his or her sole worth the time and trouble of attending and a limit on spending on a single item without discretion. Te ‘directive’ proxy limits the proxy taking part in those decisions. informing the owners beforehand; a direction to the directions given by the owner. that a diferent managing agent be appointed; The root cause of most serious disputes in or any one of the trustees’ tasks. But bear in In South Africa, says Bauer, the Sectional schemes is money. At the AGM, members mind that the owners can’t take away any Title Act defines no limit to the number of have the opportunity to discuss, and have function or power that is given to the trustees in proxies an owner can hold when attending an explained to them if necessary, how their the Act or rules, such as the raising of a special Annual General Meeting. It can, he repeats, money was spent. The logical as well as levy: the owners may only make restrictions on make a big difference to the wellbeing of a stipulated second part of the financial how the trustees go about that function. sectional title scheme, if owners attend the discussion is the approval of the budget for the Annual General Meeting in person or by And if you can’t make it? coming year. Tis is each owner’s opportunity proxy. to make sure that the amounts approved are What many owners do not realise is that, if RESOURCES reasonable but realistic enough to avoid raising they are not capable of attending, they are Paddocks the spectre of a special levy. allowed to appoint a proxy – and this should IHFM 38 38 March 2013 SA Real Estate Investor www.reimag.co.za
Take advantage of REIM’s NEW, FREE service WANT TO SAVE THOUSANDS ON YOUR DEBT REPAYMENT EVERY MONTH? Real Estate Magazine is ofering a new serviceto analyse your debt portfolio and help you save thousands on your repayments. You will be assisted with budget ftness education and mentorship to ensure that you don’t incur bad debt again, and you will be provided with a tool, mobile2budget, to assist you to manage your budget and track every rand you spend. Never again will you have to worry about how to meet your debt commitments. To fnd out how much you can save every month take our free survey. Just send us an email and you will receive a fast response on how much you could be saving each month and a free credit report. SEND AN EMAIL to [email protected] or [email protected] NOW 1ha (10 000m²) full title stand (serviced with water & electricity) 2000ha Private Game Reserve. Share in ownership of the game reserve and game. Participate in management decisions. Architect designed building packages available or own design. 24-hour security, patrol and emergency assistance. Superb Bushveld climate (Malaria-free) Away from national busy roads. Landing strip for aviation enthusiasts. Large variety of game and bird species roam free. Safe hiking, cycling, horseback and game viewing trials. Stabling facility for horse lovers. Housekeeping services on site. Levies set at R495 per month Deposits from R15 000 will secure your purchase. www.reimag.co.za March 2013 SA Real Estate INVESTOR 39
You’ve dreamt of it, now own it! True African bush living at the only Bush & Aero Estate in the world Life at Zandspruit is one of peace and tranquility - a home cocooned in wild life and bush, offering a tranquil getaway from a demanding world. The exceptional weather all year around gives you ample opportunity to explore your environment with wildlife walks, horse rides or game HOEDSPRUIT - LIMPOPO - SOUTH AFRICA drives. View this tranquil setting from the comfort of your living room or pool Contact: +27 15 793 1192 deck. Email: [email protected] Sunset views are magnificent treats! Web: www.zandspruit.co.za This is an investment sure to keep your health and living experience a notch above any other. KEY FEATURES Estate size: 1000 ha game farm 200 full title stands. Sizes range from 4 000 m² to 15 000 m² House designs are in 3 different styles being Farmhouse Pavilion Thatch 650 ha of untouched wildlife reserved exclusively for owners game viewing pleasure Safe environment and close to retailers, doctors and recreational facilities 1 km hard surfaced private runway, for aviation enthusiasts Park and hanger your plane next to your bush home FARMHOUSE STYLE THATCH STYLE PAVILION STYLE MOV E T O A BE T T E R PL A C E w w w. z and sp rui t . co . z a
REI Commercial Eskom Hikes Will Cripple Repo Rate Remains At 5% SA Property Sector Worth Trillions Commercial Property Industry Eskom is desperately seeking a total 16% South Africa’s Reserve Bank Monetary Policy The South African property sector is worth a per year tariff hike over the next five years Committee (MPC) decided to keep the repo whopping R4.9 trillion according to a new study which may cripple South Africa’s commercial rate at 5%, citing concerns about the weak rand, undertaken to discover the size of the country’s property sectors, already facing increased rising infation and labour conficts. property sector. operating costs. Reserve Bank Governor Gill Marcus This Property Sector Charter Council Te State-owned supplier of South Africa’s said the monetary policy stance remains commissioned research is the frst study of its power, has applied for a 16% annual electricity accommodative and appropriate, with the real kind in South Africa. tariff increase for the next five years. If policy rate remaining slightly negative. Further CEO of the Property Sector Charter Council, approved, the new tariffs come into effect accommodation at this stage is constrained by Portia Tau-Sekati says: “The research creates next year and cover the period between April the upside risks to the infation outlook. a hub of knowledge about the property sector, 2014 and March 2018. Business organisations, consolidating information and developing a the City of Cape Town, trade unions and a “The MPC has therefore decided to keep the common and consistent understanding. By host of civil society organisations attended repurchase rate unchanged at 5%,” Marcus said. determining the size of the South African Nersa’s hearings on Eskom’s tarif application, Tere had been no discussion of a rate cut or rise property sector, we are moving towards a proper to oppose its request for an average annual during the meeting of the MPC, noted Marcus. baseline measure to assess market size and its increase of 16% over fve years. South Africa’s growth was fragile as well as components, the scale of diferent services and During the public hearings, businesses and “below potential”, noted the MPC. activities within the sector and ultimately BEE civil society asked Nersa to scrutinise Eskom’s transformation fgures in line with the Property desired R47 billion equity returns. Sector Code scorecard.” Valuable Input Gary Palmer, CEO, Amanda Stops, CEO, Dawie Verryne, CEO, David Reid, Broker, Peter Collins, Broker, Paragon Lending South African Council Korbitec JHI Properties JHI Properties of Shopping Centres “High operating costs “Prudent shopping “Whilst growth has “In the long run, if “Gauteng is the economic and the lack of new major centre development been unremarkable, the business location powerhouse of SA industrial developments needs sufcient the sluggishness of proves over time to generating more than are the biggest threats population and income the industry has given be a bad one, sound 40% of the GDP of RSA: to growth in this sector. in a local trade area,” key players a chance to advice is to rather Johannesburg is the Tere is, however, demand explains Stops. “Te rethink their systems and get out sooner than centre of this and the for upgraded operational market must be processes – something later – if you are an energy and productivity facilities and convenient sustainable with that is likely to accelerate owner-occupier put of this city inspires the access to key transport adequate supporting the market’s growth in the property on the rest of Africa.” nodes to reduce fuel costs.” households and enough years to come.” market.” disposable income.” www.reimag.co.za March 2013 SA Real Estate INVESTOR 41
SMART MOVES BY ANGIE REDMOND Spotlight On JHB Will the CBD regain popularity or will crime keep it empty? ohannesburg is a centre of mining, headquarters of most of the major role players and south and the Ben Schoeman Highway, manufacturing, and f inance, and in the South African mining industry, including along with the upgrading of the network of Jproduces 16 percent of South Africa’s Anglo American, De Beers, General Mining, arterial roads around the City, traffic was gross domestic product. In a 2007 survey Union Corporation etc. Nearby in Hollard already starting to create a problem. conducted by Mastercard, Johannesburg Street there was the Stock Exchange and ranked 47 out of 50 top cities in the world as a most of the major banks had their head ofces With the influx of office workers came the worldwide centre of commerce. in this precinct. The eye-catching Standard supply chain of restaurants, coffee shops, Mining was the foundation of the Bank building was one example, with the later supermarkets, retail stores etc. Convenience Witwatersrand’s economy, but its importance development of an enormous HO complex at the stores sprang up on every corner and has declined with dwindling reserves, end of Simmonds Street for the bank, spanning entrepreneurs flocked to End Street and and service and manufacturing industries several city blocks. areas around the bus terminus as well as the have become more significant. The city’s train station to sell their wares. However this manufacturing industries ranges from textiles When the Carlton Centre was built in the raised a new issue, crime and grime. Buildings to specialty steels, and there is still a reliance on 1970s, a few of the larger corporates such on the periphery of the CBD began a slow manufacturing for mining. as AECI moved their offices there, from 40 decline because of high rentals and undesirable The service and other industries include Fox Street. However the construction of new elements moving in. When the Carlton Hotel banking, IT, real estate, transport, broadcast skyscrapers such as 2 Diagonal Street, which shut there were rumors that this was the and print media, private health care, transport housed some of the country’s leading newspaper beginning of the end for the CBD. Another and a vibrant leisure and consumer retail groups and the Stock Exchange, continued the good example of an iconic building falling market. Johannesburg has Africa’s largest trend of building. Tis also extended beyond the into disrepair was the Ponte Tower block in stock exchange, the JSE Securities Exchange. CBD to Braamfontein, where the Schlesinger Hillbrow, which became a haven for gangsters. Due to its commercial role, the city is the seat Building and the new Civic Centre had been of the provincial government and the site of a built amongst others. When Sandton City was built even the number of government branch ofces, as well as developers did not realise the huge impact consular ofces and other institutions. Transport to the City was fairly well run in that it and other major developments in parts those days with hundreds of thousands of of Jo’burg would have on decentralisation and Unitas House in Marshall Street in the commuters using buses and trains to commute the trend to move ofces from the CBD. Te Johannesburg CBD was the centre for the every day. Despite the addition of the N1 north location of Sandton and surrounding areas made 42 March 2013 SA Real Estate Investor www.reimag.co.za 42
SMART MOVES ABOVE: 1970 - JHB CBD, living in the northern suburbs and working and residential properties being converted to there most attractive for many commuters. It business use? Perhaps the crime statistics for saved time, there was less crime and above all March 2011 to March 2012 will reveal the the working environment was more pleasant. worrying trend of high crime rates. Te crime First to take up the offer were some of the statistics for March 2011 – March 2012 in leading advertising agencies and accounting the CBD are nearly double that of Sandton, frms, followed by retailers, restaurants, banks commercial crime in the CBD numbered 2546 and others. Tis applied equally to suburbs such while in Sandton the number of commercial as Bedfordview and Randburg, which saw an crimes totalled 1333. Common robbery is increase in commercial ofce space being made another statistic, which shows this diference. available. In the CBD, robbery sits at 1034, while in Sandton the fgure is a mere 95. Te crime in As the Sandton City hub grew in the 1970s, the CBD, when compared to a mixed-use area, developers bought up many of the gracious is shown to be startlingly high. In addition, old mansions along West, North, Fifth and the average response time for the police to Rivonia Roads. These properties were then respond to a crime is 25 minutes, ADT is 6 – developed into commercial buildings and the 10 minutes, Chubb is 10 minutes and CSS is Sandton CBD burgeoned out towards Rivonia 2 minutes 44 seconds. Crime prevention has and beyond. become a major priority in the suburbs and private security companies are no longer merely Midrand was another hub that gained responding to crime, but are actively patrolling popularity for business in the 1980s. It had areas at night and increasingly preventing access to both Jo’burg and Pretoria via a well- crimes from taking place. The SA crime developed road network and plenty of accessible statistics for 2012 – 2013 have not yet been land for future development. released, but as business continues to grow and expand into suburban areas, and more mixed- Te CBD, by the end of 2011, had almost a use developments emerge, the advantages and million square metres of space vacant. So why reasons for businesses choosing suburban areas has the CBD become a relative ghost town in over the CBD, are only growing. JHB, while the suburban areas in JHB have While there has been a determined effort ABOVE: JHB CBD in the 1970’s view seen the rise of mixed use – developments to lure businesses back to the Jo’burg CBD, down Fox Street 44 March 2013 SA Real Estate Investor www.reimag.co.za 44
COMMERCIAL Map of Johannesburg suburbs Sandton/Bryanston Including Morningside, Wendywood, Sandown, Sandhurst, Hyde Park In the last twenty years or so, Sandton has replaced the CBD as Johannesburg’s hub of business and commerce, meaning many corporate headquarters, banks, and large hotels are located there. As a general rule, the closer you get to Sandton, the more expensive housing becomes, so expect to pay a premium in this area. Bryanston along the Northern edge is less expensive, mostly known for its beautiful free standing homes on tree-lined streets exploding in a purple sea of blooming jacarandas in late spring, whereas further to the South Midrand in Morningside, Sandown and Hyde Park you will fnd stately homes as well as apartment Including Waterfall, Kyalami complexes. This area also sports a large concentration of renowned private hospitals. Technically Midrand might not count as a Johannesburg suburb as it is so far removed, but especially in the last few years it has become a popular area to live, ofering afordable housing set in wide open spaces and still relatively easy access to the main hubs of business. Roodepoort Midrand also has the advantage of being relatively close Roodepoort has a growing student population due to the to Pretoria. presence of Monash University South Africa and has seen large population growth due to Johannesburg urban sprawl. This is one of the gateways to Johannesburg from Northern areas of South Africa and Botswana and so it has economic and logistical importance. Although Roodepoort has traditionally been regarded as being part of the West Rand, it is was not made part of the West Rand District Municipality, instead being integrated into the City of Johannesburg Metropolitan Municipality, following the post-apartheid reorganisation of local government in the late 1990s. Joburg CBD Including Bruma, Kensington, Lyndhurst Most people would not dream of moving into Joburg’s city centre, given the bad reputations and crime problems of areas like Hillbrow, Berea, and Yeoville. However, just like in other big cities, this area has lately undergone some urban rejuvenation and many hail Newton and Braamfontein as the next up and coming places to be, especially for professional singles and couples without children. There are plenty of renovated apartments and lofts available with good security, beautiful views, amazing nightlife and shopping within walking distance, and the campus of Wits University just around the corner. Rosebank/Parktown Including Houghton, Melrose, Saxonwold, Killarney, Westclif Soweto If you fnd a home in one of these historic suburbs you will live at one of the city’s best Soweto is considered a metropolitan municipality of Johannesburg. It addresses in close proximity to three of its best “old” schools – King Edwards, Parktown has an area of approximately 150 square kilometers. It’s 2010 population High, and St. John’s College. The homes here are sizeable and dignifed, set on large rose to 2 million from 1.3 million in 2008. The density in Soweto is 7,666 properties, and you will be very close to the sprawling Johannesburg Zoo as well as the people for every square kilometer. News on Soweto shows violent well-known Rosebank Sunday Rooftop Market that attracts visitors from near and far. crimes against women and children and violence in general. Orange Farm Orange Farm is a township located approximately 45 km from Johannesburg. It is one of the youngest informal settlements in South Africa, with the original inhabitants; laid of farm workers, taking up residency in 1988. Support for the population came slowly mostly from people who were tenants at the great township of Soweto. The settlement now includes a modern library, few paved roads, permanent housing for some, electricity in places, a clinic, an information centre with internet access, and a multi-purpose community centre. www.reimag.co.za March 2013 SA Real Estate INVESTOR 45
SMART MOVES Te other option is the Rea Vaya bus transport system, but negotiations are still underway with the taxi associations and while the bus does offer another solution, the main mode of transportation is still a mixture of private vehicles, taxis and buses. More worrying for businesses are the proposed e-tolls, which will see the cost being laid at the feet of the business owner as the e-tolls have a knock on efect on operation costs. According to fgures released by SA National Roads Agency toll and trafc manager Alex Van Niekerk, a motorist traveling to work on the N1 from the Johannesburg CBD to Pretoria CBD would pay R6 in each direction, or R12 a day. If the motorist worked fve days a week, s/he would pay about R60 a week, adding up to R2880 a year. With the cost of travel becoming a worrying factor for motorists, this could see more people choosing to live closer to where they work or vice versa. Another factor to consider when discussing the CBD and whether it will see a revival and renewed commercial interest, are strikes and protest marches, which plague the streets of the CBD. Te strikes afect trafc fow and in some cases turn violent, having a negative impact on the productivity of businesses in the CBD. ABOVE: heat map based on the number of households per suburb in JHB Divisional Head of Renprop Commercial, ADVANTAGES AND DISADVANTAGES many buildings on the periphery have been Mike Walters, says that with the concentration OF THE CBD neglected by landlords and in some cases of people living in Johannesburg’s northern The CBD has distinctive competitive are beyond repair. However, several large suburbs, it makes sense for businesses to advantages: commercial property development companies establish their offices in these areas. He • Pivotal location in the city’s centre. have invested heavily in CDB properties by explains: “The cost of travelling to and from • Major public transportation hub: upgrading them and ofering good medium to work continues to rise, with the recent fuel all major arterials, all rail, and all bus long-term rental contracts, in order to reverse price hike and pending implementation of the services run into the city centre. the decentralisation trend. Te Gautrain and e-tolling system, more and more people want • Low rentals and property prices for other transportation initiatives may also assist to work close to where they live, or live close to high-quality ofces. in attracting businesses. where they work.” • Access to a large workforce due to easy access from Soweto. “Sandton is still the preferred destination for • Under-served markets. corporate tenants, however we are seeing the • Signifcant infrastructure. rise of Rosebank and Midrand as competing corporate office destinations due to good However, the CBD has also posed infrastructure and lifestyle amenities,” says certain major challenges to city Peter Collins, regional broker manager for JHI government: Properties in Johannesburg. • Curbing the high crime rate. Atterbury’s Waterfall development in • Lack of sufcient capacity to enforce Midrand, with the new Cell C head office, by-laws, particularly relating to Group 5 and Massmart distribution centre; and informal trading. the new Standard Bank building in Rosebank • Poor condition of certain buildings. has anchored these nodes, both have Gautrain • Properties that are in arrears with stations and excellent highway access. rates or monthly bills. While the Gautrain has certainly created a RESOURCES • Management of taxis. fast and effective method of transportation, Fraser 4 PR it is still a costly method for everyday travel. Lightstone 46 March 2013 SA Real Estate Investor www.reimag.co.za 46
Originally established in 2002 as a Corporate Interior Architectural practice with a focus on providing Space Planning, Interior Design, Ten- ant Installation and Project management ser- Originally established in 2002 as a Corporate vices, the group is best known for its fagship, Originally established in 2002 as a Corporate Interior Architectural practice with a focus on and founding arm NAP Designs. Later joined by Originally established in 2002 as a Corporate on Interior Architectural practice with a focus providing Space Planning, Interior Design, Ten- NAP Investment and NAP Developments, the group is fast becoming a leading, providing Space Planning, Interior Design, Ten- ant Installation and Project management ser- Interior Architectural practice with a focus on independent property specialist in the commercial offce market, designing and ant Installation and Project management ser- vices, the group is best known for its fagship, developing workspaces for a variety of different clients in both the Private and NAPD Holdings (Pty) Ltd is a black-owned diversifed vices, the group is best known for its fagship, and founding arm NAP Designs. Later joined by providing Space Planning, Interior Design, Ten- Public sector. and founding arm NAP Designs. Later joined by property and investment holding company, that invests, NAP Investment and NAP Developments, the group is fast becoming a leading, NAP Investment and NAP Developments, the group is fast becoming a leading, develops and manages premier business properties in independent property specialist in the commercial offce market, designing and independent property specialist in the commercial offce market, designing and the commercial and industrial sector with a particular Building on their 10-year track record for on-time delivery of quality work- NAPD Holdings (Pty) Ltd is a black-owned diversifed ant Installation and Project management ser- developing workspaces for a variety of different clients in both the Private and developing workspaces for a variety of different clients in both the Private and NAPD Holdings (Pty) Ltd is a black-owned diversifed spaces, re-development & refurbishment projects, NAPD Holdings is focused property and investment holding company, that invests, Public sector. focus towards corporate offce development and Public sector. property and investment holding company, that invests, on its goal to become a major player in the property industry, and continues on vices, the group is best known for its fagship, develops and manages premier business properties in refurbishment. building its resources around property investment, development, and manage- develops and manages premier business properties in Building on their 10-year track record for on-time delivery of quality work- the commercial and industrial sector with a particular Building on their 10-year track record for on-time delivery of quality work- the commercial and industrial sector with a particular ment teams, focused on developing quality workspaces with uncompromised spaces, re-development & refurbishment projects, NAPD Holdings is focused and founding arm NAP Designs. Later joined by spaces, re-development & refurbishment projects, NAPD Holdings is focused focus towards corporate offce development and effciency, quality and superior service delivery, to both owner and tenant sat- focus towards corporate offce development and on its goal to become a major player in the property industry, and continues on on its goal to become a major player in the property industry, and continues on refurbishment. isfaction. building its resources around property investment, development, and manage- building its resources around property investment, development, and manage- refurbishment. NAP Investment and NAP Developments, the group is fast becoming a leading, ment teams, focused on developing quality workspaces with uncompromised ment teams, focused on developing quality workspaces with uncompromised effciency, quality and superior service delivery, to both owner and tenant sat- “The early days were challenging to say the least.” stated Ntaba Phili, Managing effciency, quality and superior service delivery, to both owner and tenant sat- isfaction. independent property specialist in the commercial offce market, designing and Director and Founder of NAPD Holdings. In the 10 years in business we’ve isfaction. seen the property sector grow and created new challenges and opportunities “The early days were challenging to say the least.” stated Ntaba Phili, Managing NAPD Holdings (Pty) Ltd is a black-owned diversifed brought on by the recession and a shift towards effcient space utilisation. In that developing workspaces for a variety of different clients in both the Private and “The early days were challenging to say the least.” stated Ntaba Phili, Managing Director and Founder of NAPD Holdings. In the 10 years in business we’ve time we have evolved by constantly going above and beyond our initial scope Director and Founder of NAPD Holdings. In the 10 years in business we’ve seen the property sector grow and created new challenges and opportunities to deliver fully integrated property solutions, and the business has grown into a Public sector. seen the property sector grow and created new challenges and opportunities property and investment holding company, that invests, brought on by the recession and a shift towards effcient space utilisation. In that complete property services company brought on by the recession and a shift towards effcient space utilisation. In that time we have evolved by constantly going above and beyond our initial scope time we have evolved by constantly going above and beyond our initial scope to deliver fully integrated property solutions, and the business has grown into a Our new structure ensures that we have the competencies, management skills, to deliver fully integrated property solutions, and the business has grown into a develops and manages premier business properties in complete property services company and experience to participate in key areas of the property sector, to assist clients complete property services company Building on their 10-year track record for on-time delivery of quality work- in handling their entire relocation process by identifying suitable premises, and Our new structure ensures that we have the competencies, management skills, and experience to participate in key areas of the property sector, to assist clients the commercial and industrial sector with a particular Our new structure ensures that we have the competencies, management skills, driving a co-ordinated strategy, to deliver workspace solutions with the best use spaces, re-development & refurbishment projects, NAPD Holdings is focused and experience to participate in key areas of the property sector, to assist clients in handling their entire relocation process by identifying suitable premises, and of space, and available resources. in handling their entire relocation process by identifying suitable premises, and focus towards corporate offce development and driving a co-ordinated strategy, to deliver workspace solutions with the best use driving a co-ordinated strategy, to deliver workspace solutions with the best use on its goal to become a major player in the property industry, and continues on of space, and available resources. Our value add lies in workspace strategies that meets an organisations lease- of space, and available resources. hold and procurement objectives, for reduced cost of occupancy, improved eff- Our value add lies in workspace strategies that meets an organisations lease- ciency, whilst ensuring an enhanced corporate image and employee productivity. building its resources around property investment, development, and manage- refurbishment. Our value add lies in workspace strategies that meets an organisations lease- hold and procurement objectives, for reduced cost of occupancy, improved eff- hold and procurement objectives, for reduced cost of occupancy, improved eff- ciency, whilst ensuring an enhanced corporate image and employee productivity. “To celebrate ten years in business is an important milestone for our company ment teams, focused on developing quality workspaces with uncompromised ciency, whilst ensuring an enhanced corporate image and employee productivity. and we are very proud to have reached this pinnacle, I would like to express “To celebrate ten years in business is an important milestone for our company my sincere appreciation to our valued customers, and partners. It’s with their and we are very proud to have reached this pinnacle, I would like to express effciency, quality and superior service delivery, to both owner and tenant sat- “To celebrate ten years in business is an important milestone for our company continued support that we are able to be celebrating this wonderful milestone. my sincere appreciation to our valued customers, and partners. It’s with their and we are very proud to have reached this pinnacle, I would like to express continued support that we are able to be celebrating this wonderful milestone. my sincere appreciation to our valued customers, and partners. It’s with their isfaction. “We are most thankful to our wonderful clients and associates who have en- continued support that we are able to be celebrating this wonderful milestone. trusted NAPD Holdings with their business goals, and became part of our “We are most thankful to our wonderful clients and associates who have en- growth in the past 10 years, and look forward to your continued support in the trusted NAPD Holdings with their business goals, and became part of our “We are most thankful to our wonderful clients and associates who have en- next 10 years”. says Ntaba Phili growth in the past 10 years, and look forward to your continued support in the trusted NAPD Holdings with their business goals, and became part of our next 10 years”. says Ntaba Phili “The early days were challenging to say the least.” stated Ntaba Phili, Managing growth in the past 10 years, and look forward to your continued support in the next 10 years”. says Ntaba Phili I am equally proud of our hardworking and talented team who consistently I am equally proud of our hardworking and talented team who consistently provide a high quality and outstanding design and property advisory service to Director and Founder of NAPD Holdings. In the 10 years in business we’ve provide a high quality and outstanding design and property advisory service to I am equally proud of our hardworking and talented team who consistently Property Investment satisfy a wide range of client needs, and has endeared us to clients across South Property Investment satisfy a wide range of client needs, and has endeared us to clients across South provide a high quality and outstanding design and property advisory service to Property Development Africa, as we strove to establish a wide footprint. Our Team of specialists is seen the property sector grow and created new challenges and opportunities Africa, as we strove to establish a wide footprint. Our Team of specialists is Property Development satisfy a wide range of client needs, and has endeared us to clients across South Property Investment constantly sourcing new innovative ways to deliver successful projects to our Property Management constantly sourcing new innovative ways to deliver successful projects to our Property Management Africa, as we strove to establish a wide footprint. Our Team of specialists is Property Development client’s satisfaction. NAPD Holdings is honoured to have served our customers brought on by the recession and a shift towards effcient space utilisation. In that Architecture & Interiors client’s satisfaction. NAPD Holdings is honoured to have served our customers constantly sourcing new innovative ways to deliver successful projects to our Property Management Architecture & Interiors over the last 10 years and we look forward to serving you all in years to come. over the last 10 years and we look forward to serving you all in years to come. client’s satisfaction. NAPD Holdings is honoured to have served our customers Architecture & Interiors Here’s to 10 years of making property a success!ond our initial scope time we have evolved by constantly going above and bey over the last 10 years and we look forward to serving you all in years to come. ww w . na pd.co .za ww w . na pd.co .za Here’s to 10 years of making property a success! T: +27 11 467 9004 . F: +27 467 9054 T: +27 11 467 9004 . F: +27 467 9054 ww w . na pd.co .za Here’s to 10 years of making property a success! PO BOX 700, JOHANNESBURG, 2068 PO BOX 700, JOHANNESBURG, 2068 to deliver fully integrated property solutions, and the business has grown into a T: +27 11 467 9004 . F: +27 467 9054 PO BOX 700, JOHANNESBURG, 2068 complete property services company CELEBRATING 10 YEARS OF BUSINESS SUCCESS IN PROPERTY CELEBRATING 10 YEARS OF BUSINESS SUCCESS IN PROPERTY CELEBRATING 10 YEARS OF BUSINESS SUCCESS IN PROPERTY Our new structure ensures that we have the competencies, management skills, Originally established in 2002 as a Corporate and experience to participate in key areas of the property sector, to assist clients Interior Architectural practice with a focus on in handling their entire relocation process by identifying suitable premises, and providing Space Planning, Interior Design, Ten- driving a co-ordinated strategy, to deliver workspace solutions with the best use ant Installation and Project management ser- of space, and available resources. vices, the group is best known for its fagship, and founding arm NAP Designs. Later joined by Our value add lies in workspace strategies that meets an organisations lease- NAP Investment and NAP Developments, the group is fast becoming a leading, hold and procurement objectives, for reduced cost of occupancy, improved eff- independent property specialist in the commercial offce market, designing and ciency, whilst ensuring an enhanced corporate image and employee productivity. NAPD Holdings (Pty) Ltd is a black-owned diversifed developing workspaces for a variety of different clients in both the Private and Public sector. property and investment holding company, that invests, “To celebrate ten years in business is an important milestone for our company develops and manages premier business properties in and we are very proud to have reached this pinnacle, I would like to express Building on their 10-year track record for on-time delivery of quality work- my sincere appreciation to our valued customers, and partners. It’s with their the commercial and industrial sector with a particular spaces, re-development & refurbishment projects, NAPD Holdings is focused continued support that we are able to be celebrating this wonderful milestone. focus towards corporate offce development and on its goal to become a major player in the property industry, and continues on building its resources around property investment, development, and manage- refurbishment. “We are most thankful to our wonderful clients and associates who have en- ment teams, focused on developing quality workspaces with uncompromised trusted NAPD Holdings with their business goals, and became part of our effciency, quality and superior service delivery, to both owner and tenant sat- growth in the past 10 years, and look forward to your continued support in the isfaction. next 10 years”. says Ntaba Phili “The early days were challenging to say the least.” stated Ntaba Phili, Managing I am equally proud of our hardworking and talented team who consistently Director and Founder of NAPD Holdings. In the 10 years in business we’ve provide a high quality and outstanding design and property advisory service to seen the property sector grow and created new challenges and opportunities satisfy a wide range of client needs, and has endeared us to clients across South Property Investment brought on by the recession and a shift towards effcient space utilisation. In that Africa, as we strove to establish a wide footprint. Our Team of specialists is Property Development time we have evolved by constantly going above and beyond our initial scope constantly sourcing new innovative ways to deliver successful projects to our Property Management to deliver fully integrated property solutions, and the business has grown into a client’s satisfaction. NAPD Holdings is honoured to have served our customers complete property services company over the last 10 years and we look forward to serving you all in years to come. Architecture & Interiors Our new structure ensures that we have the competencies, management skills, ww w . na pd.co .za Here’s to 10 years of making property a success! and experience to participate in key areas of the property sector, to assist clients T: +27 11 467 9004 . F: +27 467 9054 in handling their entire relocation process by identifying suitable premises, and PO BOX 700, JOHANNESBURG, 2068 driving a co-ordinated strategy, to deliver workspace solutions with the best use of space, and available resources. CELEBRATING 10 YEARS OF BUSINESS SUCCESS IN PROPERTY Our value add lies in workspace strategies that meets an organisations lease- hold and procurement objectives, for reduced cost of occupancy, improved eff- ciency, whilst ensuring an enhanced corporate image and employee productivity. “To celebrate ten years in business is an important milestone for our company and we are very proud to have reached this pinnacle, I would like to express my sincere appreciation to our valued customers, and partners. It’s with their continued support that we are able to be celebrating this wonderful milestone. “We are most thankful to our wonderful clients and associates who have en- trusted NAPD Holdings with their business goals, and became part of our growth in the past 10 years, and look forward to your continued support in the next 10 years”. says Ntaba Phili I am equally proud of our hardworking and talented team who consistently provide a high quality and outstanding design and property advisory service to satisfy a wide range of client needs, and has endeared us to clients across South Property Investment Africa, as we strove to establish a wide footprint. Our Team of specialists is Property Development constantly sourcing new innovative ways to deliver successful projects to our Property Management client’s satisfaction. NAPD Holdings is honoured to have served our customers Architecture & Interiors over the last 10 years and we look forward to serving you all in years to come. ww w . na pd.co .za Here’s to 10 years of making property a success! T: +27 11 467 9004 . F: +27 467 9054 PO BOX 700, JOHANNESBURG, 2068 CELEBRATING 10 YEARS OF BUSINESS SUCCESS IN PROPERTY
DEVELOPMENTS BY JONATHAN SMITH Town Planning And Environmental Surveys In new developments eaders of Real Estate Investor Magazine soil related impediments to construction upon South Africa has one of the most advanced will recall that in last month’s edition, I the subject land parcel set of legislative controls in respect of Rdescribed the process to be followed in • There may be any env ironmenta l environmental impact containment by developing new commercial properties. impediments to construction upon the subject international comparison. A critical consideration in property land parcel The impact of any and all property development is the town planning and • Tere may be any community objections to development must be researched and reported environmental survey process that is necessary the development of and construction upon the upon to the relevant environment protection to most extensive property developments. subject land parcel and controlling bodies before any property There are numerous (town planning and • The local authority in whose area the land development or construction is permitted, environmental) application processes which is situated or will be incorporated is able to unless the need for such an impact study is must run simultaneously (to save time and provide essential services such as electricity, excused by such relevant bodies. costs). Prior to commencing these costly water, storm water and sewerage The research report into the anticipated applications, however, it is prudent to perform • Your application complies with the impact upon the environment of a proposed a preliminary analysis or feasibility of your requirements of the relevant provincial roads property development – whether it be a new proposed development. department proposed development or the proposed material During the preliminary investigation into • Your application complies with the alteration of an existing building – is termed an whether the establishment of a township is requirements of the relevant national, provincial environmental impact assessment. possible and feasible, the property developer and local legislation pertaining to township and The following considerations form the establishes whether: property development components and content of an environmental • Tere are any legal impediments within the • Your application meets environmental impact assessment (referred to, in short, as an title deeds that may restrict any part of the control requirements ‘EIA’, which term we shall use below): proposed development. • The proposed development is broadly • The project background and objectives as • The proposed development complies with fnancially viable. well as the scope, purpose and structure of the the uses of land contained in the existing town resultant report planning scheme or the spatial development Once you have performed – and passed – the • A physical description of the proposed plan of the relevant local authority preliminary investigation, it may be feasible to development as well as a description of the • Te current zoning of the subject land parcel launch the various simultaneous town planning proposed development’s environment, social, permits the proposed development or has to be and environmental applications in order to gain economic and institutional setting (including materially amended the necessary local and provincial consent for regional and local maps, biophysical setting and • Tere are any land claims upon the subject your development. socio-economic setting) land parcel Te frst of these that we shall consider is the • The estimated population levels of the • There may be any geotechnical, mining or Environmental Impact Assessment. development, whether permanent or temporary 48 48 March 2013 SA Real Estate Investor www.reimag.co.za
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