7th May 2010

Prospect of a coalition government will trigger more foreign buyers seeking investment in prime London property

A local currency weakened by a hung parliament and the prospect of a coalition government is set to trigger of foreign buyers seeking investment in prime London property, pushing the ratio of overseas to UK buyers to record highs of more than 70%, according to estate agents.

He said a Conservative/Liberal Demorat coalition government would apply further downward pressure on the UK buying market, due to rising unemployment from lost public sector jobs, lower wages from pay freezes and even cuts. A wave of strikes which would probably ensue would not help.

Rupert Des Forges, a partner at the Knightsbridge office of Knight Frank, said: “Currently around 70% of buyers are international or UK-based non-doms. The proportion is as high as its ever been.”

He said this ratio will increase as sterling drops.

James Thornton, fund director of Mayfair Capital, agreed: "If sterling does fall the central London property market will see the recent influx of overseas investment continue, providing a buffer to prices."

This could push prime London property, in areas like Mayfair, Knightsbridge and Kensington, to surpass current high prices.

Since its trough in February 2009, prime real estate in the capital has soared almost 16% and is now around 3% off peak end of 2007.

Tara Loader Wilkinson - wealthbulletin.com

 Property Finding & Relocation Services

t: +44 151 515 3232

e: enquiries@hendricksnoor.co.uk

 5 May 2010 - Tara Loader Wilkinson - Wealth Bulletin.com

Are you a London homeowner? With a £2m plus residence? Get ready for a new tax burden to fall on you

London-based readers who have felt themselves swayed by the charms of theLiberal Democrat party over the last few weeks, may want to bear in mind Nick Clegg's proposals for targeting wealthy homeowners, with a so-called "mansion tax".

 The Liberal Democrats’ proposed tax of 1% annually on the value of properties above £2m (€2.3m), would raise £472m with the full burden falling on only 38,500 of theUK’s 26 million homeowners (0.15%), according to property website Zoopla.co.uk [http://www.zoopla.co.uk/ ].

More than 80% of £2m plus residences are located in central London, where property prices can be dozens of times as expensive as their equivalent in one of the UK regions.

Over 29% of all the households affected would be in Kensington and Chelsea, with a further 16% in Westminster.

What is more, a £2m "mansion" in central London does not exist. Properties worth £2m are often no more than a one or two bedroom flat.

In Knightsbridge, £2m buys you an 800 square foot ground floor studio apartment, currently being marketed by London-listed agent Savills.

In Notting Hill a 1,400 square foot two bedroom mews house is on the market through private real estate agent Knight Frank for just under £2m.

“It is difficult to portray this as a UK tax proposal - it is a tax on London, and with the advent of the 5% new £1m+ stamp duty rate in 2011 will undoubtedly have an impact on the top of the London market," said Liam Bailey, head of residential research at Knight Frank.

He added it could spark a sell-off of owners who are asset rich but who do not have the income to pay the tax. 

 “Suddenly price growth - which for owners has been viewed as an unmitigated good - becomes a double-edged sword. A tax would undoubtedly lead to slower growth and even price falls," he said.

 For Property Finding & Relocation Services click here or Contact:

t: +44 151 515 3232 begin_of_the_skype_highlighting              +44 151 515 3232      end_of_the_skype_highlighting

e: enquiries@hendricksnoor.co.uk 

3rd April 2010

By Sarah Aarthun, CNN

ATLANTA, Georgia (CNN) -- If all goes well Tuesday, Andrew Perlmutter will sell his 9,000-square-foot home in an exclusive gated community outside Atlanta in less than 15 minutes.

"Going, going, gone."

Perlmutter is part of an increasing number of luxury homeowners choosing to forgo the traditional Multiple Listing Service, months of walk-throughs and back-and-forth deals with real estate agents, instead letting an auction house do all the work in selling their homes.

According to the National Auctioneers Association, sales of residential real estate at auction grew by more than 47% from 2003 to 2008.

"While auctioneers have existed for over 2,000 years ... consumers today are growing more and more familiar with everyday auctions due to the popularity of websites like eBay, and the fact the speed, transparency and the ability to set your price points at an auction meets the needs of today's buyers and sellers," says Chris Longly, deputy executive director for the NAA.

Charlotte, North Carolina-based Grand Estates Auction Co., has seen its business increase and evolve in the past two years as homeowners looking to sell are forced to adjust to the sluggish housing market.

The company specializes in absolute auctions, which require no set starting bid and award multimillion-dollar homes to the highest bidder.

And unlike some real estate auctions, Perlmutter's home isn't in foreclosure or distress. Perlmutter, 50, and his wife are typical multiproperty-owning Grand Estates clients who are looking to make a lifestyle change upon becoming empty nesters.

 "As much as we love the house, do we really need a 9,000-square-foot home in Atlanta in addition to a 4,500-square-foot home on the ocean in Massachusetts?" says Perlmutter, a business development consultant. "The truth is, we don't." read more

For Property Finding & Relocation Services click here

29 April 2010

Deidre Woollard

W Boston Hotel and Residences Facing Foreclosure

Another hotel is in trouble. The developer behind the 28-story W Boston Hotel and Residences in downtown Boston has filed for bankruptcy protection. The Boston Globe reports that documents filed in US Bankruptcy Court in Boston by SW Boston Hotel Venture LLC, a subsidiary of Sawyer Enterprises, show liabilities of $100 million to $500 million. The City of Boston itself gave the developer a $10.5 million loan a few months back to help it finish building the $234 million project. The complex opened in October, not exactly a perfect time in the struggling condo real estate market. Only around 10 percent of the building's 122 condominiums have been sold. The Globe reports that W units have sold for as much as $1.9 million for a three-bedroom and $345,000 for a studio.

The W Hotel has 235 hotel rooms on its first 15 floors with rooms that cost more than $300 a night. Hotel occupancy rates are still down in Boston because of diminished tourism. As is usually the case in these situations, the hotel operations are not affected by the filing.

21 Apr 2010

Property24

The bulk of international High-Net-Worth Individuals’ (HNWI) — those with assets worth more than $10m (R72,2m) — portfolios (33%) are invested in property, a recent study by Knight Frank and Citi Private Bank showed.

The next biggest chunk is equities at 24% followed by cash at 17% and finally bonds at 13%. Gold, despite its reputation as the safest of havens in turbulent economic environments, can claim only a 0,5% share of the average HNWI’s investment portfolio.

Furthermore, residential property is the clear favourite accounting for 50% of the typical portfolio – this does not include investors’ own homes. Commercial was next at 30%, but property funds and Real Estate Investment Trusts (REITs) were still being treated cautiously with a combined allocation of under 5%.

The report also indicates that even more money could be flooding into bricks and mortar this year — 71% of respondents said they believed that 2010 was a good time to buy, compared with 68% who think that equities are a good purchase.

"This new evidence comes as no surprise,” said Mike Smuts, managing director of Smuts & Taylor, a South African investment firm based in London.

“The tangible and straightforward nature of residential property as an investment, when the outlook for other asset classes is uncertain, has always made it one of the best assets to own. I have no doubt that if we conducted a similar study among our high-net-worth clients in South Africa we would see a similar result.”

Liam Bailey, head of residential research at Knight Frank, agrees: “Residential investment makes a lot of sense over the long term. In most locations supply of property either keeps pace or falls short of demand. Most high-net-worth investors tend to cluster around the best locations in the world, which provides its own support.”

Key cities such as London (prices up 15% in the 10 months from March 2009), and Hong Kong (up by around 41%) have seen a sharp bounce in prime values since reaching the bottom of the downturn last year. Both markets suffer from a limited supply of housing while demand from both local and international investors keeps growing. This means that when prices fall, buyers and investors are quick to capitalise on the better value offered and therefore a price floor is quickly established.

Away from these growth markets, around 73% of the prime global markets tracked by the survey have seen annual price falls with prices dipping in the Middle East (Dubai -45% and Abu Dhabi -10%), Europe (Western Algarve -30% and Dublin -25%), the Caribbean (Barbados -20%), the Americas (New York -12,5% and San Francisco -16%) and even some locations in Asia Pacific (Kuala Lumpur -1,8%) in 2009.

“You need to look for opportunity when everyone else is circling the wagons and with the current strength of the rand, historically low interest rates in the UK and some bargain buys still available in London, our South African clients are doing exactly that,” Smuts said.

“So while they need no convincing that property is indeed the best asset to own, I’m sure they will find it reassuring to learn that the wealthy of the world agree with their sentiment.”

Property Finding Services

t: +44 151 515 3232

e: enquiries@hendricksnoor.co.uk

Helping you decide whether now is a good time for buy-to-let

Simply Business By Josh Hall 19 April 2010

Some analysts and commentators have suggested that the buy-to-let ‘boom’ is over. Certainly, inexperienced investors who fail to do their research are likely to find the current environment difficult. But, if you have an existing portfolio and some money to spend, now may well be a good time to build on your investment.

Why should you expand your portfolio?

The biggest profits only come as a result of expansion. As you expand your portfolio, your profit-making potential increases; an investor with ten properties has twice the profit-making potential of an investor with five properties.

A larger portfolio also allows you to spread risk more effectively. Void periods can be financially crippling if you rely on a single property, but the associated risk drops exponentially with each addition to your portfolio. You may also find it easier to secure credit with a larger portfolio, as you will have more collateral against which to secure loans.

What are the risks?

It is important to note the dangers associated with expanding a property portfolio. As with any business venture, if you grow too quickly you risk jeopardising your financial security.

Many investors finance their second purchase by remortgaging their original property. While this can provide a good opportunity to release cash from an otherwise liquid asset, you should remember that doing so can cause cashflow problems and could jeopardise your ability to get a good mortgage rate later on.

Your monthly payments are likely to increase if you remortgage your property, meaning that the rent may no longer be enough to cover your outgoings. At the same time, you are highly unlikely to be able to find tenants for the second property immediately after purchasing it. You must therefore ensure that you have enough cash to cover the shortfall in rent on your first property, the mortgage payments on your new property, and the cost of bringing it up to scratch.

Your workload will also increase as your portfolio expands. All of the properties will need to be maintained, rent will need to be collected, and tenants’ queries will need to be addressed. As their portfolios expand, many investors choose to take on the services of a property manager – particularly if they also have another job. The management of a growing portfolio quickly turns into a full-time job, and you may therefore need to bring in extra help to ensure that you keep on top of it.

Choosing the right properties

Your property choices will have a significant impact on the success of your portfolio. So what should you be looking out for when choosing properties to expand your investment.

Price will obviously be a crucial factor in any investment decision. You must ensure that you do not overstretch yourself financially. If you will have to borrow against the value of your existing property, make sure that you will be able to cover the higher mortgage payments.

Location becomes even more important as your portfolio expands. If your properties are spread out across the country, will you realistically be able to give each the attention that it needs? If not, you will need to look closer to home or hire a property manager – the cost of which must be factored into your considerations.

If you are branching out into a new area or location, make sure that you do your research in advance. Find out what sort of rents are being achieved for similar properties in the area and, if necessary, speak to some local agents to find one with whom you would be happy to work.

Quality is another key concern. Do not rush into buying a substandard property simply because now seems like a good time to expand. Make sure that you perform sufficient ‘due diligence’ on the property. Get a trusted surveyor to look around in order to alert you of any potential problems.

Despite the vagaries of the property market, the current environment is likely to be a positive one for many buy-to-let investors. If you have some cash to spend and are looking to increase your profit-making potential, now may well be a good time to consider expanding your portfolio.

But you should make sure that you do not rush into a purchase – and that you do not jeopardise your financial security by growing your business too quickly.

10 simple rules landlords can try to run a better buy-to-let

Simply Business By Josh Hall 15 April 2010

As a landlord you should therefore take suitable steps to make your life as easy and hassle-free as possible, while ensuring that you provide a great service to your tenants. To get there, try sticking to these 10 commandments for good letting on a buy-to-let property.

1. Get a good tenancy agreement

The tenancy agreement is the most important document in the landlord’s arsenal. This sets out your rights and those of your tenant, and must be properly drafted.

Most tenancies are Assured Shortholds. It is possible to find standard format agreements on the internet, but you should always seek personalised advice from a solicitor where possible. A well drafted tenancy agreement might cost you money now, but it will save you a lot of hassle later.

2. Check out your tenants' background and references

Many private landlords do not perform any checks on prospective tenants. You must protect yourself from defaulted payments, so make sure your tenants can afford the rent by carrying out credit checks, asking for employment details and requesting references.

3. Get landlord insurance

Conventional home insurance policies will not cover you if you are renting out a property. You need dedicated landlords’ insurance to protect your investment and your bank balance if something goes wrong. You might also think about taking out cover against defaulted payments, particularly if you rely on rental income to pay a buy-to-let mortgage.

4. Do an inventory

Make sure that you complete an inventory and ‘snagging list’ when each tenant moves in and moves out. Get this signed by the tenant, and take pictures where relevant. This will help to minimise the potential for arguments about damage at the end of a tenancy.

5. Choose your property manager carefully

Make sure you do some proper research before choosing a property manager or lettings agent. This individual will be your point of contact with the tenant; if they do their job poorly it reflects badly on you, and is likely to create more work in the future. Where possible, choose a property manager based on a trusted personal recommendation.

6. Handle deposits properly

Tenants’ deposits should be lodged with a dedicated organisation like the Deposit Protection Service. You have a legal responsibility to use a government-authorised scheme, and tenants can demand significant financial compensation if you fail to do so.

7. Don't overspend on lettings agents

Unscrupulous letting agents often take advantage of new or inexperienced landlords. Do not be conned into overspending, particularly if they are not carrying out any property management tasks. You may also wish to look at the recent High Court ruling against estate agent Foxtons, outlining what judges have deemed to be fair practice amongst agents.

8. Chase debts early

Make sure you chase payments as soon as they become overdue. The longer you allow debts to mount up, the less likely you are to see the cash. You should also make sure that you familiarise yourself with the procedures for seeking eviction in the event that a tenant continuously fails to pay.

9. Choose your buy-to-let property carefully

If you are yet to choose a property, there are several important factors that you should consider. Location, availability of potential tenants, and proximity to your home are all aspects that should be looked at. You may wish to read our article on choosing a buy-to-let property for more information.

10. Inform your lender

Finally, it is vital that you tell your lender if you intend to rent out your property. Conventional mortgage arrangements may not be sufficient for buy-to-let, so you should seek guidance from your mortgage provider before beginning.

Properties being sold faster

 Demand for residential property has seen a "significant jump" in the first quarter of 2010. The latest FNB Residential Property Barometer survey shows a sharp 32.2% rise in demand over the corresponding quarter in 2009.

On a scale of one to ten the demand activity rating rose to 6.35 in the first quarter of 2010, from a rating of 5.68 in the first quarter of 2009. Other key parts of the survey point to further improvement in the residential property market, according to FNB.

The average time that a property remains in the market before being sold, has declined from 13 weeks and two days, to 12 weeks and four days. The percentage of sellers not achieving their asking price has also dropped from 89 percent to 76 percent from quarter to quarter.

Further there has been a turnaround in reasons for selling. Property owners selling "in order to downscale due to financial pressure" declined from 24% to 20%. This decline was more significant in the high-net worth market. In this band financial "downsizing" accounts for 15% of residential sales, while the figure was an estimated 20% and higher for middle and low income bands.

Positive demand figures were chiefly being driven by the primary house buying market. The buy-to-let and non-essential purchases segment returned the lowest demand activity rating at 5.57. Despite this, FNB has selected the luxury market as the "long-term pick" despite its current weakness in demand.

"This is because the market's condition is not only determined by the state of its demand, but also by the state of its supply side, And from the various Barometer and other data the luxury market remains in the least oversupplied state most of the time," says FNB Property Strategist John Loos.

The relative health of the luxury market boils down to two factors: the financial health of high net worth households relative to other households, and the lower availability of vacant prime land to develop new stock in the sector, thus reducing oversupply.

Other interesting figures to have emerged from the Property Barometer survey include:

• FNB estimates that the cumulative house price inflation for the luxury segment measured 429.5% over the past ten years, while the figure for the affordable segment is 240.6%. This puts paid to sentiment that the affordable housing sector, which has outperformed other sectors over the past few years, is necessarily the better investment.

"This perhaps demonstrates to property investors that they should not only look to segments where demand growth is high and new entrants to the segment are said to be abundant. Many luxury areas are often near to the country's prime and well-established business nodes such as Sandton, or on the slopes of Table Mountain, on which there is limited vacant land supply," concludes Loos.

He warns though that the tendency for luxury residential property to be close to business nodes puts pressure on lower income communities, who have to pay more for transport. Loos believes South Africa has to rise to the challenge of building more affordable housing close to business nodes; or new business nodes need to speed up migration to more affordable areas. 

Absa Property Analyst Jacques du Toit confirms that the residential property buying trends they are seeing correspond with FNB's: "Although some of the investment markets, according to our calculations, especially along the coast, have actually started to improve in the past quarter, the performance even there is still not at a level where the primary markets are."

Property Finding & Relocation Services - Cape Town, please  express your interest to:

Hendricks Noor Luxury Lifestyle Management

t: +44 151 515 3232

e: enquiries@hendricksnoor.co.uk

Growthpoint Properties (JSE:GRT) Limited, South Africa's largest listed property company, has launched 23,000sqm high-end mini- and midi- units in Meadowdale at the landmark Growthpoint Industrial Estate.

A vibrant non-traditional industrial park, Growthpoint Industrial Estate is a secure industrial, warehousing and distribution estate situated in the established and well-performing Route 24 industrial business node in Meadowdale, Gauteng. The estate offers excellent access to motorways and is in close proximity to OR Tambo International Airport.

Making this new industrial development remarkable is its quality premises and indigenous landscaping and planting which create an aesthetically pleasing environment, more often associated with upscale office parks. This provides a pleasant, healthy and environmentally-respectful business environment.

Designed for the small to medium user, the high-quality mini- and midi units were built with flexibility in mind. Suitable for a diversity of businesses, premises can be as small as 200sqm or consolidated to meet larger tenant requirements.

"Take up of the mini-units is positive and a strong level of enquiries is being experienced," says Engelbert Binedell, Growthpoint Properties Divisional Director Industrial.

Binedell explains that the mini- and midi- units are ideal for entrepreneurs wishing to formalise their businesses, growing businesses or those wishing to enhance the convenience or quality of their location.

Combining affordability and functionality, each unit provides superior height with the ability to stack in access of industry standards and includes a mezzanine level which is ideal for an office component.

Occupational Health and Safety requirements were critical to the design process. "The flexibility to tailor-make customised premises to meet individual business needs is a huge advantage," says Binedell. In a number of units both on-grade entry and docking facilities are included.

"The ability and resources which Growthpoint has in place to execute the custom preparation of the quality space for our clients is proving to be a draw card for Growthpoint Industrial Estate," explains Leon Labuschagne of Growthpoint Properties developments.

"Growthpoint's specialist construction, design and utilities services are made available to our clients who enjoy full consultation during the tenant fit out process. This results in a purpose-designed quality premises," notes Labuschagne.

Providing secure, 24-hour controlled access the mini- and midi-units at Growthpoint Industrial Estate can accommodate a full range of users up to 4,000sqm.

Amongst the estate's existing larger users is Barloworld (JSE:BAW) Logistics in a tailor-made warehousing facility of 17,000sqm, which includes a 16,000sqm warehouse. Leading cosmetic and beauty brand Justin/Avon is also located in a 12,000sqm high-tech facility at Growthpoint Industrial Estate.

The estate will comprise some 125,000sqm of industrial space when fully developed. This equates to a further 78,000sqm of potential bulk on which 10,000sqm has been earmarked for development in the near future.

Growthpoint Industrial Estate is one of the few developable sites of its size and quality along the R24 motorway between Johannesburg and OR Tambo International Airport. Its location and infrastructure make it ideal for warehousing and logistics companies.

Source: Real Estate Web

Express your interest to:

Hendricks Noor Luxury Lifestyle Management

t: +44 151 515 3232

e: enquiries@hendricksnoor.co.uk

30th March 2010

The Business Secretary Lord Mandelson has announced a major expansion of financial services offered by The Post Office including a new mortgage product with a 90% loan-to-value ratio aimed at first-time buyers.

In a drive to put banking back into the heart of communities and making the Post Office network of 11,500 branches more sustainable he also announced £180m of new funding for the Post Office.

The Post Office which some are now calling the 'Peoples Bank', will also increase its lending substantially, aiming to double the value of its mortgage book in the financial year 2010/11.

Publishing the Government’s response to its consultation on Post Office banking, Lord Mandelson said:

“Since the global banking crisis we have set about reinventing the financial services industry piece-by-piece, building a system that is fairer, trusted and more responsible. 

 “Today is the next step in that process. The Post Office is a well-loved community institution and this move will bring more banking services back to the heart of those communities.”

Source: propertytalk Live - Alex Bell  

The North West experienced the greatest monthly rise with a movement of 3.6 per cent. Wales was the region with the most significant monthly price fall with a movement of -2.4 per cent.

The most up-to-date figures available show that during December 2009, the number of completed house sales in England and Wales rose by 89 per cent to 73,889 from 39,138 in December 2008.

Source: Propertytalklive.co.uk - Alex Bell

25 Mar 2010

Central London prices rose 3,2% in February and this is the strongest rate of growth in a single month since August 2007.

“This was the strongest rate of growth in a single month since August 2007 – a sure sign that conditions are improving at last,” says Lanice Steward, MD of Anne Porter Knight Frank (APKF), whose London associates, Knight Frank, released the figures.

Analysing the Knight Frank London figures, Steward said that these now show a 19% rise off the low point of ten months ago.

“This is, to put it mildly, an amazing recovery. Central London prices are now only 10% below the market peak of March 2008 and Knight Frank has shown that the larger houses in the £5m bracket are now achieving prices at or above those of that peak.”

Liam Bailey, head of residential research at Knight Frank, said that low interest rates and the weak pound had drawn in foreign capital.

“There was a perception which, in my view, was correct, that price falls of up to 24% had created a market unlikely to be found ever again in the UK – or elsewhere,” said Bailey.

Forty five percent of the buyers of £2m plus homes, he added, had been foreigners.

Steward commented that with the right exposure a similar influx of overseas buyers could and should now be taking place in Cape Town, where the recovery has “only just begun” and where, she said, bargains similar to those of London are still achievable.

“There will, of course, always be those who decry the idea of allowing foreigners to own so much as one square metre in our country – but I simply cannot see why this should be so: The more we sell to foreigners, the more local developers can build replacement products.

“Can there really be any disadvantages in having ‘swallows’ or retired people coming to Cape Town with their pounds, their dollars or euros? Any reluctance to accept this source of income seems to me illogical.”

Steward added that conditions for investment in SA are now good – “our average returns, allowing for inflation, are still 3,5% better than those in the developed world”. However, irresponsible statements by politicians like ANC Youth League leader Julius Malema could dampen enthusiasm for SA as an investment venue.

“It is imperative for every public figure to be aware of the impact their statements can have on the SA economy and therefore on job creation, which, need we remind them, is the only solution to poverty and crime.”

Source: Property 24

The Chancellor has just announced a budget sweetener for the housing market by scrapping Stamp Duty on first-time buyer property purchases up to £250,000 during 2010 and 2011.

But the measure will be paid for by increasing the Stamp Duty tax rate to 5% on all properties costing over £1,000,000, so that it is "not a burden on the public finances" according to the Chancellor.

The new Stamp Duty tiers will be introduced from midnight tonight.

23 March

Prime Central Location real estate is back in favour with wealthy buyers from both from overseas and the UK.  This in turn is buoying prices, despite the fact that there is more choice of property on the market than at any time since early 2008.

Prices in the most sought-after districts of the capital have risen by 2.4% this month, and 5.1% over the past year.  The average price of Prime Central London property that has now topped £2.2 million - a new record.  Prime Platinum (the top 10% of the market by value) is worth almost a million pounds more, at just under £3.2 million.  This is 3.2% more than last month and 6.4% more than a year ago.

Within inner London, the Royal Borough of Kensington & Chelsea saw Prime property values surge by 3.0% this month, and 3.2% over the year, to almost £2.5 million.  The trend is even more marked at the very top of the market, where average Prime Platinum prices in the borough are almost £3.6 million.  They have risen 3.5% this month alone, and 11.8% since March 2009.

There is strong interest in high value real estate from a variety of sources, with the very wealthy generally not constrained by the repercussions of the ‘credit crunch’ and indeed potentially benefiting from current low interest rates.  Those who raise funds against their share portfolios have been able to borrow more on the back of the recent rally in the FTSE. 

Overseas buyers are also showing their resounding confidence in the UK over the medium to long term, and indeed in real estate in the capital - notwithstanding concerns expressed over the country’s long term debt ratings and the fiscal measures the next government will need to implement to tackle the UK’s budget deficit.  Indeed, many foreign investors see now as a good time to buy with Sterling relatively weak against most major currencies and the market relatively slow with high levels of stock available.  Prime Central London has seen stock levels rise by 63% over the past 12 months and 8% since last month, according to the Primelocation.com Prime Index.

Helped by the strength of upmarket parts of Zone 1, the London prime property market generally also recorded a good performance this month, with a 1.1% increase in Prime property values, the biggest increase for eight months.  Prime Platinum surged by 1.3% this month, again the biggest rise for eight months.  Average Prime property values for London as a whole are now just under £1.1 million, and just over £1.6 million for Prime Platinum.

Andrew Smith, Research Director at Primelocation.com, says: “As the UK draws out of recession, but with the housing market remaining relatively quiet, astute buyers and investors from both abroad and the UK see this as a good time to find the right property, in the right location.  There is an excellent choice of property on the market - more than we have seen for over two years.  Interest rates are low for those who do need to borrow and, with the pound at around $1.50 or €1.10, many overseas buyers see UK real estate as a attractive proposition.

Many of them are familiar with favoured prime locations in Central London like Kensington and Chelsea, and see them as a good, secure long term investment.  That will help build momentum in the prime markets over the coming months.”

Source: Property Talk Live - Alex Bell

18 Mar 2010

Article by Antoinette McDonald

Granite countertops and laminate flooring are so 2009. The hot finishes this year are solar panels, boreholes and whatever else will help you to save energy, water and money in your home.


Going green is not only good for the planet. It’s good for your pocket. By making your home more energy efficient, you’re also making it that much more attractive to future buyers.


Buyers are becoming increasingly environmentally conscious


According to Berry Everitt, the CEO of the Chas Everitt International property group, the sort of features buyers are looking for include roof insulation, double glazing, solar or gas geysers, prepaid electricity metres, boreholes, drip irrigation systems and rainwater storage tanks – “anything that helps to cut household power and water consumption”.


So what will it cost you to include some of these features – and what kind of savings and long-term benefits can you expect?


Lucien Power is a registered plumber and Eskom-accredited solar panel installer.


Power, who owns Solar Powers in Cape Town, says solar panel installation now constitutes the bulk of his work. “With Eskom having increased its target for the number of solar systems to be installed this year from 35 000 to 250 000, the demand is high,” he says.


Financially stressed homeowners are no doubt also keen to cash in on the rebates being offered by Eskom. Depending on the size of your geyser, you can get between R2300 and R12500 back for going solar. Eskom has said these rebates will decrease over the next few years in line with price hikes.
So what’s the damage? It depends on the size geyser you go for, says Power.


“I recently installed a 200-litre system for a client in Franschhoek: the upfront cost was R20 825 and the rebate on this system is R6461. So the total cost to the client was R14364, after the rebate.”


The saving over the long term is of course where the big benefit lies. “Your geyser accounts for a third of your electricity bill. You can save 70% of that cost by installing a pumped system or 75% by installing a Thermosiphon system, which works on natural convection. So if your electricity bill is R900 a month you can save R210 a month by putting in a pumped system or R225 a month using a Thermosiphon system.”


Power says you can now convert any existing geyser and qualify for a rebate.


Solar tips


He offers the following tips to consumers considering going solar:

• When choosing a geyser size, work on 50 litres of water per person. Consider it an investment, so rather up size according to the size of the property than the number of occupants in the house at present.
• It’s often cheaper to install a new system (geyser, collector, pump, controller) than to retro fit your existing geyser.
• Use an approved Eskom supplier and installer. There are a lot of people offering cheaper systems which haven’t gone through the stringent quality controls.
• For a more accurate quote, ask your plumber to do a site visit.
• Take advantage of Eskom’s rebates now before they are reduced.

Get water wise


South Africa is chronically water-stressed. According to a top official at Johannesburg Water, within the next five years demand for water will have caught up with supply. At a water security conference last year, experts stressed the need to curb demand and facilitate reuse.


Given that about 80% of water can be reused, grey water systems are also becoming increasingly popular.


Neil Ardé is a landscape technologist and the proprietor of Red Root Landscapes in Cape Town. He says these systems are a great conservation option. “You must remember that this water must be used in the garden within about 24 hours in order to avoid bacteria build up.”


Indigenous gardening is also big money-saver. “Rooting out aliens and placing them with indigenous plants makes your garden more water wise and bird-friendly. Indigenous plants are generally more resilient to dry spells than exotic species. If planted in the correct position which suits their natural setting, they will provide many years of enjoyment. By going indigenous a garden shifts from becoming a visual experience to a sensory experience, attracting many interesting insects, birdlife, and other wildlife.”


Borehole water and rainwater are also preferable to costly municipal water. “An irrigation system is an investment in your property. But the environmentally sensible thing to do when installing one is to channel water from roofs and driveways to water storage tanks.”


One option that is initially costly, but seriously sustainable in the long run is sinking a borehole, says Ardé. “A borehole specialist will be able to tell you what the ground water is like in your area. Interestingly, borehole water is usually of a superior quality to municipal water.”

Source: Private Property

In spite of global equity market rebound, there is good value

Dr Simon Pearse, CEO of Marriott Asset Management, looks at recent global market moves and notes that equity and property markets are still attractive but fixed interest assets should be avoided

International markets saw positive returns during 2009, but on a three-year basis, the performance has been generally negative with only the J.P. Morgan Global Government Bond Index and cash (US dollar) showing positive returns.

In most advanced economies equity and property markets performed well last year, but cash and bond returns lagged considerably.

The outlook for the various asset classes is mixed. We favour property and equity investments in the current environment and believe that fixed interest assets are unattractive.

International Real Estate:
During 2009 Marriott Asset Management actively promoted quality international real estate as the income streams had become attractive with forward yields exceeding 6%. The GPR250 Real Estate Index returned 34% last year. We are still of the view that this asset class is offering good value with forward dividend yields exceeding 5% and income growth being supported as the developed economies come out of the recession. We remain confident that exposure to the Marriott International Real Estate Fund will benefit investors.

International Bonds:
With a general expectation of rising inflation in the global markets, it would be prudent to avoid US treasuries and long bonds in general.

International First World Large Cap Equities:
There has been a marked recovery in the first world economies with equity markets having performed well during 2009. There is still real value in selected large capitalisation companies in the US, UK and Europe as the dividend yields remain high at around 4% and are supported by reliable dividend streams.

Source: Real Estate Web

What drives the market?

In terms of any market, the price is driven by demand and supply. Remember that demand is a function of affordability. You can want all you like, but if you can't afford or don't have the funds, then you're not seen as demand. If you're the owner of a sweet shop, all the kids outside with their noses pressed against the window is not demand. They are potential demand, but until they have cash in their pocket, nope, they're not demand. Rather, the kids inside the store with money in their pocket is demand. The belief that so many homeless people will push up demand is rubbish. What they will push up is demand for government-financed low-cost housing, and until they get out of the welfare income stream, they will not be demand for the property market.

There are three factors that make up a property transaction:

1.       The desire or decision to purchase

2.       The availability of credit (most houses are purchased on credit, so this is fundamental; cash buyers have a functionally negligible impact)

3.       The affordability of that credit

All three have to be in place for a buyer to emerge. If any one of the three is missing, no buyer. So, looking at each factor:

Decision: Many people have been hurt as property ‘investors'. These scars will be carried for a long time. So, not going to grow.

Credit: Credit is not as easily obtainable as before, and banks are very tight with their lending criteria. Puts a damper on the demand.

Affordability: With higher costs for everything, debt repayments are less affordable. So, again, dampening the market.

As you can see all three are in a declining stage, so the chances are good that demand will reduce, and with the excess supply coming on board (with all the bad deals now selling, and foreclosures), I don't see prices going up any time soon. How long? My best guess is five to 25 years. The five years is based on the time it took to build the bubble, and the 25 years is based on the psychological scars. Those hurt by property are unlikely to go back into property. Their kids however, will. Hence I'm more inclined to view the longer term option, with, to my mind, property not being an investment for a long time.

When will property be a good investment?

So, when then?

The two main drivers of demand are your ‘newlyweds' (not previously property owners ie, purchasing without selling an existing property) and your investor. An investor is not the person who buys in the hope that the price goes up, then can sell it on.  That is a speculator. The investor has an idea of rental income, debt costs (bond repayments), levies etc, and after some simple arithmetic, they can determine if the property will pay them each month. For example:

Rental Income: R1500pm

Bond:                    R1000pm

Levies:                  R300pm

Net income:       R200pm

The property above is a positively-geared property in that it produces a net income (these figures are based on a flat I used to own). So without taking into account any future price, this property is immediately affordable. Thus the investor is price sensitive, in that if the price rises higher and this makes the bond repayment too high, the net result is a net deficit (the investor will have to supplement the property every month.), ie, a negatively-geared property.

The newlyweds are also price sensitive, to the extent where rental costs are approximately equal to ownership. Until such time as they find that the cost of ownership is approximately equal to that of renting, they will remain renters.

What about relocation? You sell one property to move, and buy another. There is no net demand increase in the property market.

So, your two major demand drivers (newlyweds and investors), who are both price-sensitive, are priced out of the market. Hence I don't see demand returning to anywhere near the levels of prior years, or even outpacing the supply expansion currently underway. Investors and newlyweds will both start looking to purchase property once there is parity between the cost of owning vs the cost of renting, and until that occurs, I'd stay a renter. Simply because you get a better deal.

But I'm paying off someone else's bond?
And now a response to the adage: but I'm paying of someone else's bond? Yes, you are. But if a house costs R10 000pm on a bond + R1 000pm on levies/rates and taxes, and you can live in it (by renting) for R6 000pm then the owner is effectively paying YOU R5 000pm to live in his house. Pay the R6 000, and buy gold with the balance of the R5 000pm that you were going to spend on the bond. When renting=owning, then use some or all of the gold investment as a large deposit.

What will be a fair price?
By definition, the average person/couple must be able to afford the average house. If the average house is R900 000, then the average person/couple must be able to afford about R9 300pm on bond repayments. With the introduction of the NCA (National Credit Act), that must be R9 300 of available disposable income. For that to occur, the average couple should be earning (gross) anywhere from about R17 000pm upwards. Can the average couple afford the average house? Not at R900 000 they can't. Perhaps at R600 000, which means that in real terms houses have to come down by about 30%? At the same time, couples are realising that the risk they are exposed to if their joint income just makes the grade, is that if one of them loses their job, they lose their house. The newlyweds above are not going to jump into the property market with that risk, until such time as either one of them can comfortably afford the house, or the cost of renting is approximately equivalent to the cost of ownership.

My guess is that prices will come down by 25% to 40% from their peaks. Bearing in mind that we've had about a 10-15% reduction, I'd guess that a further 20%-25% is quite feasible.

*Dean Morris is a member of the REW community. He is an IT trainer and private investor with a CFP® and Advanced PostGraduate Diploma Financial Planning (Advanced Investments)

 Source: Real Estate Web

It is that time of the year again when new leases are signed, and whether you are a property manager, homeowner or landlord, there are some common tips to help manage your property during 2010.

Michelle Dickens, managing director of TPN, a registered credit bureau, shares her top tips when it comes to property management.

1. Plan your year. By knowing your budget and setting up short-, medium- and long-term goals for the year. By breaking your action plan down into achievable monthly targets you will be able to ensure that your business reaches its full potential.

2. Look after your property. Quality properties attract quality tenants. All properties deteriorate over time. A smart investor understands the advantages of spending to maintain the property and remember the money spent is set off against the tax expense.

3. Secure a quality tenant. A quality tenant will respect the property, pay the rent timeously and behave appropriately. Watch out for smooth talkers with expensive clothes and fancy cars. The easiest way to ensure you have a gem is to do a background credit check.

4. Look after your quality tenant. Negotiate reduced rentals, or minimal escalations. There is always a risk in whatever investment you may have, best to try and secure it by maintaining your fixed income.

5. Keep yourself in the loop. It does not matter whether you have outsourced the property management to a letting agent, or if you are managing the property yourself, this is your investment. Keep a monthly account of each property and carefully note payments received and expenses made.

6. Communication. Develop your relationship with your tenant by communicating regularly and fairly. This could be as simple as sending a monthly statement, or listening when the tenant has a maintenance issue and speedily resolving it.

7. Act quickly. The longer a problem persists the more difficult it becomes to resolve. If the tenant is in arrears call immediately, remember that the supplier who pesters earliest and loudest usually gets paid first.

Also resolve maintenance issue quickly this reduces the possibility of your tenant using maintenance problems as a bargaining tool for non-payment.

8. Be stern, but fair. Life deals complications. Your tenant’s hurdle could result in non-payment of rent. If this non-payment is a once-off, be reasonable, but take action. Insist the tenant signs an acknowledgement of debt and establish a re-payment plan. If the non-payment of rent is an ongoing issue, cancel the lease early before arrears mushroom.

9. Have quality service providers. Have access to plumbers, electricians, property managers and credit bureaus that know their niche and can provide you with fast, reliable, honest work the first time round.

 Source: property24

03 Mar 2010

According to the 2010 International Property Rights Index (IPRI) released on Tuesday, South Africa has retained its position at number 24 out of 125 countries measured.

The index is prepared annually from a study conducted by a Hernando de Soto, fellow at the Washington-based Property Rights Alliance. It is supported by 62 partner organisations worldwide, including SA's FMF.

"SA is in the top 20% of countries measured in this study and this bodes well for the future if the rating improves or even remains at this level, which it needs to do if SA is to fulfil its promise of being one of the world's high growth countries,” says the Free Market Foundation (FMF).

"SA has shown that it has the potential to grow and prosper. All it needs is the continued application of policies, such as respect for property rights, which have been shown to play a crucial role in bringing about economic growth."

In 2009, SA shared its position on the index with Spain and South Korea. This year they are joined by Qatar and Taiwan. Botswana is at number 44 on the index, while Mauritius is at 46 and Ghana at 59.

The top five countries on the index are Finland, Denmark, Sweden, Netherlands and Norway.

Legal and political environment (LP), Physical Property Rights (PPR) and Intellectual Property Rights (IPR) are the three components that are measured in the compilation of the index. SA's LP score was 5,7 (out of 10) coming out at number 45, while on PPR its score was 7,4 and came out at number 22 and on IPR it scored 7,4 coming out at number 20.

Its overall IPRI score was 6,8, making it number 24.

IPRI is yet another index on which the high crime rate pulls SA down. – I-Net Bridge

Source: Property24

Homeowners who are postponing their property sale plans now in the hope of achieving higher sale prices during the Soccer World Cup are not doing themselves any favours.

So says Willie Steinmann, owner of the new Chas Everitt International office in Melkbosstrand on the Cape's western seaboard, who notes that demand for homes in the village and in the nearby Atlantic Beach Golf Estate has increased substantially in the past six months.

"However, many owners here who intend selling are missing out on this surge in interest because they've decided to wait until the World Cup to put their properties on the market. Indeed, we already have a shortage of stock to offer buyers in the most popular price ranges."

The trouble with this approach, he says, is that the buyers who are currently really keen are quite likely to go elsewhere if they cannot find homes to buy in Melkbos - "and, speaking realistically, they are unlikely to be replaced by a wave of foreign buyers falling over themselves to pay higher prices during or immediately after the World Cup.

"In addition, any delay in placing a property on the market means increased holding costs for the owner and finally, there is a strong possibility that interest rates will start rising again later in the year, making it more difficult for any buyer to qualify for finance.

"In short, home sellers who hang back now are short-changing themselves."

Steinmann says that most of those currently seeking to buy in the village proper are targeting properties in the R1,4m to R2m range, while those looking to buy in the golf estate are willing to pay between R1,6m and R2,5m - and that any homes in these categories that are perceived to be well-priced and offer good value are being taken up very quickly.

Also very popular, when available, are homes in the neighbouring Duynefontein area, where prices start at around R1,2m for a three-bedroom, two-bathroom house on a large stand, and range up to around R1,8m for a renovated property.

"There is far less demand," he says, "for the luxury homes in the village priced at R4m and up.

"As for flats, there are quite a number available now at prices from R650 000, and we recommend these to investors as there is always good rental demand in Melkbos, and extremely limited opportunity for new development because of the Koeberg restrictions."

source: Realestateweb

Finance minister Pravin Gordhan delivered very little for the property sector in his maiden budget in South Africa's Parliament on Wednesday - however a nasty VAT trap could soon be eliminated for cash-strapped property developers.

Officials are to review an expensive tax scenario in which developers who don't immediately sell units and are forced to rent must pay VAT on building materials and no longer claim VAT.

The idea is to provide cashflow assistance for developers who are forced to rent out stock they can't sell - a common scenario thanks to the tough economic conditions.

"The sale of residential property by developers is subject to VAT at the standard rate, while the leasing of residential accommodation is VAT exempt. VAT input credits are allowed for standard-rated sales of property, but disallowed for exempted rentals. The temporary leasing of residential units requires a full claw-back of the VAT input credits for leased units," said the treasury.

"The current value of the adjustment is disproportionate to the exempt temporary rental income. Options will be investigated to determine an equitable value and rate of claw-back for developers," it said.

Although the trap will be reviewed, officials will be keen to fix the problem without creating a VAT loophole for developers.

More private property developers are set to benefit from enhanced urban development zone (UDZ) tax allowances. This was revealed in Parliament this week when South Africa's new finance minister Pravin Gordhan unveiled the national budget.

The National Treasury has proposed that an enhanced allowance should be considered for private developers who improve another party's land.

"Depreciation allowances, including the accelerated depreciation relief for urban development zones, are available if the underlying land is owned by the party undertaking the improvement. This requirement creates practical problems for development partnerships undertaken by government and the private sector. Government entities often provide long-term use of land in exchange for private development."

The UDZ has sparked the rejuvenation of many "ugly duckling" areas, so a proposal to further extend the allowance is likely to provide a further boost to property values in many areas.

Source: Realestateweb

The question on every South African home-owner’s lips : "How do I rent my house to 2010 soccer visitors?"

Unfortunately for these home-owners, there is no quick-fix, easy solution. Match, the FIFA-endorsed accommodation agency, only works with formal accommodation establishments like hotels. And, after years of concentrating on sales rather than rentals, few estate agency groups have expertise in short-term lets.

You are taking your chances even with the big name brands that have pots of money to throw at glossy magazine advertising and international property shows and that want to jump on the 2010 bandwagon. There are no guarantees they'll find a tenant for you or ensure your home is well looked-after while you live elsewhere.

There are, of course, a handful of agents who are exceptionally good at sourcing and managing tenants for short-term lets, but they are few and far between and tend to be in areas frequented by holidaymakers or who were specialists in short-term corporate rentals long before South Africans even contemplated having the world cup soccer games on home soil.

With everyone expecting to make easy, big money over the 2010 soccer period, the services of the average property rental agent are unlikely to come cheap.

You could rent out your home yourself. A short-term rental offering is like a small business. You need a good product and a selling plan - and your product needs to meet the expectations of your clients when they check in.

Your home needs to be neat, clean, and appropriately furnished with the mod-cons a soccer fan paying big bucks for his, or her, special holiday expects. Then, you have to think of ways to market your property, make it stand out from the rest.

 You have got competition: All the thousands of other South Africans who want to rent out their properties, plus the hotel chains here and in nearby countries that are hoping to cash in. Also don't forget that many soccer visitors will be looking for more casual accommodation, like caravans and tents.

The big challenge with going the do-it-yourself route is finding your tenants. If you don't have the benefit of word-of-mouth through a network of foreign friends and family members, you need to start by investigating where to advertise - which country and in what medium.  It is difficult to target a specific nationality or group of supporters for the entire period. Teams will be moving around and their fans will want to follow.

There are some websites offering 2010 advertising opportunities, but you don't have any guarantee appropriate tenants will find them in cyberspace. The traditional property listings services, meanwhile, haven't focused particularly on 2010 visitors. And, remember: Advertising can be expensive.

You might want to consider other ways of tapping into that influx of visitors, like hooking up with a local bed & breakfast to offer your home if they need extra space or receive calls from people wanting a self-catering option. You could consider offering the B&B a referral fee or a share of the rental for passing business your way.

Instead of targeting foreigners, consider opening your home to locals. After all, they will also need somewhere to sleep if they want to share in the fun and excitement of watching soccer games.

Some home-owners are contemplating offering their homes plus tickets as a way of attracting some temporary rental business during the period.

 07 Dec 2009

Nominal year-on-year (y/y) house price growth in the South African housing market picked up further in November 2009, with the prospect of price deflation of less than 0,5% for the full year, Absa's House Price Index revealed on Monday.

After adjustment for the effect of inflation, house prices continued to decline in real terms up to October this year, albeit at a slower pace, it said.

The index rose to 370,2 in November compared with 366,8 in October and 353,4 in November 2008.

House prices in the middle segment of the market were up by a nominal 4,7% y/y to R1,006m in November, after increasing by a revised 3,4% y/y in October. Month-on-month price inflation came to 0,9% in November.

In real terms, middle-segment house prices were down by 2,4% y/y in October, compared with a decline of 3,9% y/y in September after revision, Absa said.

The average price of small houses (80m-140m) declined by 1,7% y/y in nominal terms in November, compared with a revised drop of 2,2% y/y in the preceding month. As a result, the average nominal price in this category of housing came to R665,100 in November. In real terms, the average price of small houses was down by 7,7% y/y in October, after declining by a revised 8,6% y/y in September.

In respect of medium-sized houses (141m-220m), nominal price deflation came to 3,3% y/y in November (-3,8% y/y in October after revision). This brought the average price in this segment to around R916,900 in November.

Adjusted for inflation, prices declined by a real 9,2% y/y in October (9,6% y/y in September after revision).

The average nominal price of large houses (221m-400m ) increased by 3,5% y/y in November this year, after rising by a revised 3% y/y in October. The average nominal price in respect of large housing was at a level of 1,419, R700 in November.

In real terms, house prices in this segment dropped by 2,8% y/y in October (-3,5% y/y in September after revision), Absa noted.

Absa says various economic indicators point to a gradual recovery in the South African economy. However, households are still struggling with relatively high levels of debt in relation to income, tough labour market conditions and declining real disposable income.

"In view of these developments, housing market conditions are expected to improve further in 2010, but it is set to be a gradual process with nominal price growth forecast to remain in single digits over the next twelve months," said Absa.

In the first eleven months of 2009, nominal house price deflation averaged 0,5%, compared with the same period last year. If recent trends in price levels prove to be sustainable, nominal price growth of at least 5% can be expected in 2010, it added.

Real house prices are forecast to decline for a second consecutive year in 2009, with at best a small real increase next year, based on nominal house price and consumer price inflation trends and projections, it concluded. – I-Net Bridge

Source: Property 24

This week in Tabloid Tuesday, a snapshot of property market media coverage: Donald Trump gets heavy-handed with three villagers getting in the way of a magnificent golf course development in Scotland, while just around the corner another wealthy American real estate investor has probably scored the St Andrew's property deal of the decade, right in front of the famous links course's 18^th hole. Plus: update on beleaguered Zimbali property developer IFA.

David versus Donald. American property tycoon Donald Trump is used to getting his way, whatever the endeavour. The Apprentice host is scary on TV, but three home-owners on a windswept stretch of Scotland's North Sea coastline aren't cowering. The group, dubbed by the British media as the "Menie Three", are fighting to stay in their homes, which are getting in the way of Donald Trump's plans to create the world's greatest golf course - one billed as being even better than any of Scotland's historic links courses.

The voice of the Menie Three this weekend was David Milne, who owns a converted coast guard station situated just outside Trump's 1 400-acre championship links course terrain. Milne, a safety consultant to the oil industry, bought the property in a remote, windswept spot above the dunes for £18 000 and added four-bedrooms. He told The Daily Telegraph he never thought Trump would get permission to build on the shifting dunes that are a site of scientific interest. The couple, reported the paper, have been offered £230 000 for the flat-roofed house they have extended over the past 17 years, plus they would get lifetime membership of the resort and would be offered one of Mr Trump's 500 new houses at cost price.

Milne said the offer was "insulting". "I only play golf twice a year, and I already live in the best place, with the best view. This property is not for sale and it never has been," he said.  Milne believes Trump wants the property "in order to remove it from the landscape". The Milne home would have a perfect view of the £1bn resort, including the 400-bedroom hotel and 950 holiday homes.

Village idiot vs New York Clown.  Milne isn't the only one of the "Menie Three" who claims to have been insulted throughout this mega golf course development deal. Michael Forbes, in his 50s and living with ageing mother Molly, has taken to name-calling along with the Trump machinery. Said The Daily Telegraph of Donald Trump: "When he learned that Mrs Forbes had raised a court action in an attempt to stop the project, Mr Trump issued an unbusinesslike assessment of his rival, calling him a village idiot and his property ‘a disgusting blight on the community'". Mr Forbes in turn, it is reported, called Trump a "New York Clown".

Could the case, at the Court of Session in Edinburgh, scupper Mr Trump's plans? Tabloid Tuesday reckons it seems unlikely. After all, Trump has already got through years of protests and objections and a planning inquiry. It seems quite possible he will succeed in forcing the Menie Three to sell. Of greater concern, perhaps, will be the worldwide property slump and poor economy as well as the stiff competition from other top golf courses within striking distance of the 8 000-year Aberdeenshire sand dunes through which Trump is hoping to carve.

These days, Trump's organisation has changed tack. At the weekend, instead of delivering more strong words about the "Menie Three", his spokesman on the ground said people will "love" Trump's first resort in a cold climate but could not discuss the project while a court case was going on.

Desperate developers, eager estate agents. Speaking of changing tack, has Pam Golding Properties (PGP) changed its mind about auctions? Not so long ago the organisation issued strongly-worded statements discouraging property sellers from putting their properties under the hammer. But this week, the estate agency invited the media to attend an open outcry sale in conjunction with the Alliance Group to offload Boschendal Estate, owned by IFA Hotels & Resorts (JSE:IFH) and JCI (JSE:JCD), the former effectively used as a slush fund by assassinated corporate thief Brett Kebble.

Ronald Ennik, MD for PGP's Gauteng region said in August: "Now more than ever there is a stigma attached to selling a property on auction as opposed to via the conventional, private treaty method through a real estate agent. Due to the current economic situation and distressed sales, buyers are expecting a big discount on auction. It's essentially an all or nothing scenario, and if the auction does not achieve a successful sale then you've put all your eggs in one basket and have no room to now try to negotiate a better price."

Ennik's words were prophetic, with Boschendal's historic Goede Hoop homestead fetching what some might perceive as a disappointing R23.5m.   Two properties were taken off the block to alleviate onerous selling conditions.

Nevertheless, Ennik's boss Dr Andrew Golding was upbeat about the Winelands deal. Always looking on the bright side of things, Golding said, after the event that the auction which raised R43m on three properties achieved "pleasing prices".

The Goede Hoop buyer was a local, Golding told Moneyweb's editor-in-chief Alec Hogg on the SAfm Market Update with Moneyweb this week.

With IFA in dispute with creditors at its Zimbali, Kwa-ZuluNatal site, and owing hundreds of millions of rands to Nedbank (JSE:NED), Tabloid Tuesday is not surprised an auction was the way to go. And, with the Goldings once sharing office premises with Kebble, it is perhaps only fitting that PGP is involved in a JCI property disposal.

Property deal of the decade. An American property developer with fewer hassles on his hands than Donald Trump or IFA's Wessel Witthuhn is Herb Kohler, who recently snapped up Hamilton Hall, a building that some believe has the best sporting view in the world. The Hall, which enjoys a prime position at the 18^th of St Andrew's Old Course, and is across the road from the club house, has stood empty since 2006 after the University sold it to a property developer, said The Daily Telegraph. Kohler plans to be polite and considerate to the "villagers". He will consult the locals about what to do with the building, though speculation is it will be converted back into a hotel.

Source: Real Estate Web

8 December 2009

"Bond approval" or even "bond application" are terms that have aroused much scepticism and caution over the last two years.

"But with the relaxation of lending policies there should be a much improved chance of being approved for a loan on favourable terms," says Kay Geldenhuys, property finance manager at ooba.

"Banks are once again offering 100% loans and the current lower interest rates make it a better time for consumers looking to buy."

Ooba offers these tips on getting that bond approval:

Checking affordability

Before you even apply for a loan, check whether the property is affordable, suggests Geldenhuys.

"Determining the right price range is an essential first step to avoid wasting time looking at unsuitable properties. A property finance consultant will take you through the exercise of establishing what you can afford, taking into account your specific financial requirements. Monthly repayment affordability is generally calculated at 25% to 30% of joint gross income, but other criteria, including existing debt commitments, may affect the size of the loan that the bank will grant. Remember that the "hidden costs" (transfer and bond registration fees) usually have to be paid upfront, and add a sizeable amount to the cost.

Get prequalified

One way to ensure that the loan you apply for will be granted is to get a prequalification. Companies will, at no cost, prequalify you for a certain bond amount which takes the stress out of applying for a bond once you have decided on buying a property. An additional positive factor is that buyers who are prequalified are in a much stronger position to negotiate with sellers.

Check your credit record

Bond applications may be declined for several reasons: you may not be able to afford the monthly loan repayments, or may require a 100% loan that would push the repayments beyond your reach. Another critical consideration is your credit profile, says Geldenhuys.

"This includes your employment history and consumer bureaux results, which provide a picture of your debt and payment history. If the bank considers you a good credit risk, it will assess the value of the property to be purchased. If this too meets all the relevant criteria, the loan is usually granted. The mortgage originator also often motivates the merits of a particular loan application to the bank's credit manager."

To improve your credit record, Geldenhuys suggests cancelling out-of-date credit cards; and ensure that you pay all instalments on existing debt by the due date every month.

Submit the correct information

To assist the bank in determining its risk, you will be required to provide personal information such as bank statements, salary slips, a statement of assets and liabilities, a statement of your monthly expenses and information on your credit history, including whether you have ever been insolvent.

Get the best interest rate

The lower the bank's risk in lending funds to a particular borrower, the better the rate it will offer that individual. In calculating its risk, it will consider factors such as the amount of equity you are willing to invest into the property, i.e. your deposit; the size of the loan; and the repayment-to-income ratio (the ratio between the bond payment and the buyer's income).

The type of bond you apply for, your credit history and the investment value of the property you intend buying also affect the rate you will be offered. Shop around and negotiate with various banks to ensure you get the best package.

"While a deposit is not always required, try to put down 20% or more if you can, as the bank is more likely to offer you a better rate as the risk of the loan is reduced," suggests Geldenhuys.

Source: Property 24

Travel Bookings soon available via Hendricks & Noor:

Flights

Hotels

FOR LUXURY VILLAS BOOKINGS PLEASE EMAIL YOUR REQUEST NOW!!! There is a high demand for Luxury Accommodation, availablity LIMITED!!!  Contact us TODAY!!!

Bill Rawson, chairman of Rawson Properties, has come out with guns blazing. He reckons South Africa is the best place for property investors. Following criticism of his views that it's a bad idea to invest in residential bricks-and-mortar elsewhere (click here to read "Don't buy property offshore" and Realestateweb's article: "Great reasons to invest offshore"), Rawson has issued more reasons why you should stick to South African property. Read the articles and join the debate, by commenting below, on whether it is a good idea to invest some of your money in property elsewhere in the world. Here is Rawson's statement to the media:

In a recent hard-hitting statement, Bill Rawson, Chairman of Rawson Properties, disagreed radically with other high profile people in the South African property sector on the question of whether to use the increased offshore allowance - now up to R4m per person - to invest in property overseas.  Rawson said that he would not advise investors to follow the overseas route.

Rawson ‘s view was that, taking the low returns of First World property and the dismal prospects for significant capital growth into account along with the difficulties frequently encountered with foreign legislation and foreign agents, the South African property market is still the right place for all except the most sophisticated South African investors to be.

Asked to comment further on this, Rawson this week said:

"Firstly let's accept that it is always wise to have part of one's portfolio - I would say up to 40% - in property, whether this is local or offshore.

"South Africans looking at overseas opportunities then have to ask themselves:

· Will the likely increases in South African municipal rates be so high that they cut seriously into the returns and detract from South African property values?

· Is the current strength of the rand in relation to euros, dollars and pounds so advantageous that it would, in fact, be a pity not to be buying overseas right now?

· If the rand remains strong would you still be in a position to sell at a profit?

· Accepting that the rand could always go on one of its rollercoaster rides, are you willing to pay the extra cost for rand protection in case this happens?  If not, do you appreciate that both your deposit and monthly payments could have risen 10% to 20% between the time of signing and eventual handover of the cash?

· Looking at overseas prospects generally, do you foresee the European and USA economies recovering and if so in what period?  Some have said that a full recovery will take at least a decade.

· Do you believe that the inefficiencies and corruption in South African national, provincial and municipal administrations are so serious that they will damage the economy irretrievably or do you think, as I do, that South Africa is just riding out these difficulties and that so long as we have a vigilant press and a strong opposition in parliament the negative factors will be kept sufficiently under control?"

Rawson said that European and UK property, although a safe bet, is currently giving only 2% to 3% returns whereas South Africa's residential property returns are usually in the order of 5% to 10%, while commercial properties are giving 7% to 12%. Furthermore, he said, capital growth rates in all sectors of South African property are likely to be once again above 8% by the end of 2010.

"Even allowing for a higher inflation rate," he said, "it seems to me fairly clear that the local product is preferable to that of foreign countries - and it is worth noting that some 150 000 expatriates seem to agree:  almost weekly we receive requests from South African expatriates looking for property buys back here in their homeland and many of these people now have several South African properties in their name."

The US property market is on the mend and SA's prospects are also looking very rosy.

So says RE/MAX International's senior vice president of international franchise sales, Peter Gilmour, who adds "South Africa remains one of the better performing global property markets".

"Within the US the real estate market is optimistic despite the continued decline in property sales and ongoing bank repossessions. The projected number for property sales transactions for 2009 is five and a half million and although a far cry from the figure of 8 million recorded for 2005, it is still positive compared to results recorded for 2008.

"The number of pending home sales, properties that have sold but not transferred, is up for the seventh month in a row and is at the highest level since March 2007. A higher Pending Home Sales index indicates better sales in the coming months and shows buyers are returning to the market."

In terms of transactional activity, Gilmour said that first-time homebuyers account for approximately one third of all property sales transactions within the US, largely due to the $8k tax subsidy deduction policy instituted by the government. Sharing the remaining balance are investors who, making the most of a depressed sellers' market, are buying homes for between 20% and 30% of the market value of two years ago, and then there are the ordinary buyers, who have remained unaffected by market conditions.

"Homebuyer subsidies have not yet been renewed, which is a concern to the US real estate industry. As a result, strong industry lobbying efforts are being undertaken in a bid to obtain further extensions to homebuyer subsidies and in so doing unlock the door to recovery of the US property market."

"Leading the journey out of the recession are the states California, Arizona and Nevada that were first affected by the recession. We anticipate that those states along the East Coast will take a little longer to recover."

"Amidst a slow recovery, obtaining a mortgage remains a rigorous task. Banks remain conservative and there has been no substantial change in lending policies. Potential home buyers are still required to submit 10% to 20% cash deposits. The very complex US credit rating system is also severely hampering sales."

Gilmour further added that commercial property is taking a tremendous strain at the moment.

"Vacancies are up in all areas, businesses and individuals are extremely cautious and conservative when considering their needs, and rental negotiations are also difficult. The returns on commercial properties will drop substantially and this will impact negatively on their value."

Gilmour advised that the most active property sales transactions are taking place in the entry-level $100k to 300k price bracket. "Buyers are looking for smaller units that are close to transport infrastructures and place of work. The luxury property market is very slow throughout the US although distressed sales are attracting investors."

Dr Simon Pearse, CEO of Marriott, notes that the US still offers some of the most reliable income streams for investors at attractive prices.

"America has led the world into the recession of the past three years and is likely to lead the way out.

"In terms of the financial crisis of the past year, the American stimulus package equates to about 5% of GDP, which when compared to China at 12% of GDP, suggests that the US is not necessarily bearing the brunt of it. The total global banking write offs of US$1.6 trillion has been borne by banks around the world, particularly the UK and Europe. Much of this relates to US securitised debt that has funded American homes.

"Coming from South Africa, with 0,5% of global GDP, 1,7% of global stock market capitalisation, an unusually strong Rand and a deepening recession, now is a sensible time to diversify some savings offshore," he concludes. – Eugene Brink

 By David Burrows (Source: AOL MONDAY, 26TH OCTOBER 2009)

Now is the ideal time for young first time buyers to get on the housing ladder, according to research from Lloyds TSB.

In a survey conducted by the bank, 70% of parents with children over the age of 18, said now was the right time for their children to buy rather than rent.

The research also showed that one in four of these parents (23%) plan to use their savings to help their children buy their first home and, on average, they have a total of £41,000 saved in order to provide financial assistance to all of their children.

After a rapid decline of first time buyers during 2008, the number returning to the market is gradually beginning to increase. In January 2009 there were 8,600 first time buyers compared to 19,200 in August. In the second quarter of 2009, first time buyers accounted for two in every five (38 per cent) house purchases (1).

One of the reasons first time buyers are increasing in number is affordability as Stephen Noakes, commercial director of mortgages, Lloyds TSB, explains. "The current housing market presents a real opportunity for first time buyers, as long as they are ready to buy with a deposit. Housing affordability is back to the level it was in 2003, so many parents with grown-up children want to help them take advantage by using their savings."

The survey from Lloyds TSB showed that helping each of their children equally is very important to parents, with 93% intending to provide the same financial assistance to all of their children.

Herein lies a problem because providing money for deposits on houses or flats can easily account for a large chunk of savings – possibly ₤50,000 plus if there is more than one child to cater for.

Given that there are real concerns that UK savers have under-funded their pensions, there is a real danger that parents may be using money that would otherwise have made life a little more comfortable in retirement. Of course it may be the case that the parent is repaid in full by their son or daughter as their salaries and prospects improve but there is no guarantee that this will happen. As the children are highly likely to outlive the parent there is a strong likelihood that any money used for deposits will effectively remain tied up in the child’s property investment.

Mortgage providers are looking at ways to encourage parents to help out their children in the housing market without tying up large chunks of money indefinitely. Lloyds TSB has unveiled its three year product, called ‘Lend a Hand'. It offers first time buyers a 95% loan to value mortgage, at 4.99%, by taking a legal charge on a savings account belonging to their parents. Parents retain ownership of their savings while earning a competitive fixed interest rate of 4.00% and, at the end of three years, their savings are returned.

According to Lloyds TSB the appeal of the product is that parents are more likely to provide financial assistance if their children could secure a mortgage that allowed their savings to be returned with interest. And this type of mortgage also lets parents recycle their savings to help their other children.

Ray Boulger, senior technical manager at John Charcol is broadly in favour of the product. “Borrowers are getting a better rate with this product – effectively they are getting the typical rate you would associate with a 75% mortgage. Also I think more first time buyers are going to qualify for a mortgage with this than for a standard 95% mortgage.”

He adds: “But you have to remember that money is at risk, in the event that the purchaser defaults on payments and the property is sold at a loss. However I would suggest that in most cases families will know that their child is responsible and loans like these might be far more preferable to just handing the child a cash deposit. It is also worth bearing in mind that after three years, if property values have fallen, the loan to value might be higher so not all the savings will be protected. But I would suggest if anything property prices will start to rise over the next year. I think it is an interesting product which is attracting a decent amount of interest.”

David Hollingworth at London & Country Mortgages takes a similar line to Boulger. “At the moment first time buyers are not realistically going to get a 95% mortgage – to just get into conversation with a lender you will have to have a 10-15% deposit. With products like this from Lloyds, the additional security offered by the parents means the buyer is getting a decent rate on their loan. Also the parent, despite the fact that the money is tied up for three years, is receiving a perfectly reasonable rate on their savings.”

He adds: The alternative scenario to mortgage deals like this is that the parent has to gift money to their child. Can they afford to and do they want to? What if their child is buying with a boyfriend or girlfriend they do not entirely trust do they really want to hand over large amounts of cash?”

Whilst Hollingworth is largely supportive of the Lend a Hand product, he questions the tone of Lloyds TSB promotional material which talks of ‘real opportunities’ for first time buyers in terms of property prices.

“Prices may have come down a little but the bottom line for buyers is to take a measured approach. There is no rush to buy and even allowing for the possible end to the stamp duty holiday, homebuyers should focus primarily on buying the right property for them at a price that they can afford.”

Top tips for getting your children on the property ladder

• Look at the different mortgages available for first time buyers and how your financial assistance can best be used.
• Work out how much money you can afford to use to assist your child with purchasing their property and decide whether it is a gift or a loan to your children.
• Review all of your savings and investments to establish where is most cost effective to take your money from
• If possible, access lower interest paying accounts and those where you won't have to pay a fee to access money.
• Try to avoid emptying your ISA, or other tax efficient investments which you have locked up.
• Sit down as a family and be clear how much you are providing for your child and under what terms.If you are providing a loan, agree over what period you would like it to be returned and agree up front if any interest will be charged.
• If your savings will be linked to your child's mortgage, make sure you seek independent legal advice. For example, what will happen to your savings if your child falls behind on their mortgage payments.

Add your main content here - text, photos, videos, addons, whatever you want!

Add your main content here - text, photos, videos, addons, whatever you want!