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Property 24/10 - 107

10 May 2012

Africa property values set to grow
Africa and other emerging economies are tipped as locations where property investors should look to for real growth in the next decade.

This is according to the Knight Frank/Citibank Wealth Report.

Lanice Steward, managing director of the Cape Peninsula estate agency Anne Porter Knight Frank, notes that in the last five years pundits reported a steady increase in capital flows, including property investment to the Far East including China, India, Singapore, Hong Kong, Taiwan and Malaysia.

She says it is interesting to note that just on 80 percent of the 6 000 high net worth individuals who participated in the Knight Frank survey are either satisfied with or optimistic about the future wealth creation prospects in Africa.

Although 75 percent listed local political instability as a potential worry, a high figure, 82 percent rated global economic problems as just as threatening.

Residential property values in Africa on average rose by 8 percent in 2011. 
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Housing, energy and water in SA
The percentage of South African households that fully own the properties they live in decreased from 58.1 percent in 2010 to 53.6 percent in 2011.

According to the General Household Survey July 2011 conducted by Statistics South Africa (Stats SA), this decline was accompanied by a slight decline (of 0.9 percentage points to 10 percent in 2011) for households that partially owned their house and a slight increase in the percentage of households that rented accommodation.

The greatest increase was observed for households maintaining ‘other’ tenure arrangements (10.4 percent in 2010 to 15.5 percent in 2011).

Stats SA says these arrangements include living with parents or other relatives for example - a sign of financial stress as households bundle together their living arrangements to save some money on rent or perhaps rates and taxes.

It is important to note that these arrangements started to become more prevalent after the financial crisis of 2008 – a time during which an increasing number of households started to experience financial strain
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Beetle reports and property sales
Prospective home buyers in regions like the Western Cape and KwaZulu-Natal where beetle certificates are required should be aware that they are not necessarily protected against all wood destroying organisms.

Buyers may have to foot the bill for damage to wooden structures or furniture even though the deed of sale says a beetle report has been carried out, says Dave Alcock, board member of the South African Pest Control Association (SAPCA).

Alcock explains that in many cases the condensed or limited reports of woodborer inspectors only cover two types of beetle (Hylotrupos bajalusand Oxypleuris nodieri).

Dry rot or other wood destroying insects and termites, including the common furniture beetle, do not have to be mentioned.

This may have dire consequences for the new owner, the seller and the agent.   
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Scoring a loan for commercial property
In most cases the toughest obstacle that a potential buyer of commercial property has to face and overcome is the procuring of finance.

Jason Lee, national manager of Rawson Properties’ new Commercial franchising division, says that in his experience many buyers go about things in the wrong way.

First, would-be buyers look for a suitable property, then they sign an offer for it (subject to being able to get a bond) and only then do they go in search of finance.

Lee explains that this approach is a deal killer because, firstly, the time allowed to raise the money is often far too short and, secondly, they will probably not be able in the time allowed to gather together all the required documentation, without which the banks will not even look at their application.

Buyers entering this field for the first or second time must familiarise themselves with the requirements, terms and conditions that accompany an application for a bond on a commercial property. 
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Mixed use properties in demand
Mixed use property developments defined as multi-purpose destinations that integrate different uses will increasingly become popular in the future.

These usually include residential, office, retail, hospitality, entertainment and medical elements in one structure, says Mark Souris, managing director of retail, commercial and industrial property management company, Periscopic.

Souris says being able to develop new and successful shopping centres in existing suburban areas is becoming more difficult.

“Similarly, growth in the rural market while still prevalent will soon begin to slow down as that market too becomes saturated.”

According to Heidi Franck, managing director of property asset management and quantity surveying company, Intigra, town planners are intent on putting a halt to further urban sprawl and are instead encouraging a more efficient use of existing buildings.
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Land expropriation issues in SA
There has been a lot of debate in the press recently about land reform and the use of expropriation to bring about such reform in rural areas.

While this is an important debate, it should not be forgotten that the development agenda will be increasingly played out in South Africa’s cities and towns.

South African cities are currently sprawling, inequitable and economically uncompetitive places that are becoming vulnerable to the impacts of climate change and where poor people are trapped in marginal areas that by their nature discourage investment.

While there has been increased investment in township areas and greater sub-division and densification of suburban areas over the last 15 years, the structure of our cities remain largely unchanged, with investment – understandably – continuing to target well-located urban spaces.

Market forces alone are unlikely to change this structure, as few of the costs caused by the negative externalities of a city’s structure are borne by developers and investors
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Delinquent tenant and agent – help!
I would like to ask a question about a delinquent tenant... 
During the course of the last year I experienced repeated and ongoing problems with my current tenant, from illegally harbouring up to 10 people in one of the garages and sub-letting that part of the property to them, to various noise disturbances that have resulted in fines imposed by the HOA, to illegally parking a car wreck outside the house. In addition, on at least two occasions the police have had to be called for domestic assault altercations. 

He has paid the rent late consistently, sometimes as late as the 20th of the month. Finally his lease is ending, and as per the lease stipulation I have served him 2 months’ notice that the lease will not be renewed. He has now completely stopped paying the rent. 

He no doubt is aware that to formally evict him will take at least 2 months and he simply ignores the letters I have had hand-delivered from my attorney. 

What recourse do I have against him, if any, and is there any realistic chance I will get the last 2 months of rent from him? Is it worthwhile following a formal approach through the firm of attorneys who I use, should I consider the small claims court or is it simply a waste of time and should I chalk it up to experience? 

His deposit is held by the rental agent, who is not in the slightest interested (the tenant and rental agent are personal friends) and will in no way assist. When approached the Estate Agents Affairs Board (EAAB) I was told that the rental agent had not paid his last 3 years of membership with the EAAB and as such did not have a current fidelity certificate and was operating illegally anyway. 

Do I have any recourse against either the tenant or rental agent or is it simply a waste of time?
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Estate agents go mobile at Property24
With approximately 13 million South Africans now accessing the Internet via their cellular phones, a strong mobile presence is no longer merely a nice-to-have, but a necessity for business owners looking to corner an increasingly on-the-go market.

Property24, South Africa’s leading property publisher, has now made the mobile sphere readily accessible to the country’s estate agents, with the launch of their new free mobi-site service.

All estate agents listed on the Property24.com site will now be able to communicate their offerings more effectively to a growing and increasingly engaged audience, with each office now eligible for a free mobi site on the Property24.com domain.

JP Farinha, Property24’s General Manager, believes that this service, which isn’t currently offered elsewhere in South Africa, represents an excellent opportunity for estate agents to reach a significantly broader market.

“In spite of the exponential growth of mobile Internet usage in South Africa over the past year, most estate agents still don’t have an easily accessible mobile presence,” explains Farinha. “Our aim in launching this service is to ensure that potential buyers are able to find any information they require irrespective of their location, and to help estate agents capitalise on valuable sales leads.”
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